Merc dealing with the same hand
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Last year Mercedes-Benz reduced the number of its CV dealers by more than 50%, to 26. Yet its dealer book is as thick as ever. Consolidation, or a conundrum? And what about those rumours that M-B recently sacked its entire field sales force? CM met the men at Milton Keynes to get the facts.
• by Brian Weatherley Last autumn Mercedes-Benz i.JK) declared that it was reducing the number of its UK commercial dealers from 56 to 26. Anyone running a truck with a three-pointed star could have been forgiven for worrying.
But John Barker, Merc's general manager of CV dealer operations, insists there was no cause for alarm. "The dealer guide is still as thick," he says. it's the same dealer guide, just with fewer names, or a repetition of names."
But how can you reduce the number of your dealers by more than 50% and still end up with the same network? The simple answer is that through a number of mergers, acquisitions and straightforward takeovers the same Mercedes CV network is now in the hands of a smaller number of bigger dealers.
"All of the locations we had before we started the ratio
nalisation are there today," Barker explains. "The customer in Cornwall goes to St Austell as he did before; the customer in Devon goes to Exeter; the customer in Somerset goes to Yeovil. They now happen to be owned by Lancaster South West—but the parts man, the salesman, the service technician, they're all the same people,"
Rationalise
Why rationalise in the first place? M-B (1..110's CV boss Bruce Whitfield reckons: "if you look at the structure of the CV franchise, a significant amount of the profitability comes from the after-sales. If you look into the future you'll see that aftersales business will reduce as vehicles become more reliable, and with 56 dealers the viability is put into question."
Choosing who'd be one of the 26 couldn't have been easy. "There were difficult decisions, and that was inevitable," says Whitfield. "Interestingly, no dealer disagreed with the strategy, but it's like everything in Ife...not in my backyard."
As the former dealer principal of Rygor Commercials, Whitfield was probably better placed than most to manage the change.
"We looked at a variety of criteria," he says. "But the main one we were looking for was people who'd performed in the marketplace." Significantly, M-B (UK) didn't have to pay any compensation to those dealers who lost out in the reshuffle.
"At the end of the day they were under two years' notice of termination," says Whitfield. "So what we did was to make the whole experience as amicable as possible for everyone. We said to the winning franchises that they had to pay a realistic market price for the businesses. It was an opportunity to them, in many cases, to double the size of their business—but they had to pay a fair price."
Whitfield reckons the changes have been well communicated: "I don't think the perception is that we've cut back."
Barker is equally confident that ft's been relatively painless for Mercedes users: "The guy who could have been concerned is the guy who's travelling around the country, and we would have heard very soon if he wasn't getting the service— which hasn't been the case."
But big dealers are no more immune from economic upsets than smaller operations. Isn't there a danger that some of them will ultimately overreach themselves?
Whitfield acknowl edges the risk, but believes it's led to a closer relationship.
However, M-B (UK) monitors its dealers on a monthly basis. "Not just to keep an eye on them," he stresses.
"We have a business management department that can be of assistance on the financial side, and we can put in training programmes for people who feel they've got a weakness on doing that transformation."
Certainly one of the acknowledged weaknesses of the old network was that it lacked a real focus at the heavy end of the market. Whitfield is determined to change that. Dealers will be expected to appoint dedicated tractor salesmen as part of a rolling programme that will end early next year.
"I want to achieve success with Actros. I'm not satisfied with the position we're in now," says Whitfield. Although he is reluctant to give a figure, he wants Mercedes to be back in the top three in tractor sales— in terms of both new and used sales.
With the recent launch of its Signature used truck programme, Mere certainly needs to rebuild its used tractor reputation, after the debacle with SK in recent years.
Things weren't helped by the fact that until recentiy Charterway and M-B Finance were doing their own thing on disposals. That's also changing. "All Charterway disposals are through us," says Whitfield. "In terms of M-B Finance, we're very close to announcing that all disposals will be through a common source—ie, Signature."
Field sales
Having sorted out the dealer question, what about the story circulating at the recent CV show about Merc losing its entire field sales team?
"Contrary to what you might believe, we didn't actually sack all our field sales force," Whitfield says. "It's simply been restructured to reflect what's been going on at the dealers, with most, if not all, staff reassigned to new positions and areas."
So that's another rumour scotched...