IN-13's used scheme could cause conflict
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by Amanda Bradbury • Some of Mercedes-Benz's 65 truck franchise dealers have criticised the manufacturer's plan to launch a centralised used vehicle sales centre which could take 60% of M-B's £28m used vehicle market.
The German manufacturer says its UK Used Commercial Vehicle Centre (NGC), the largest of its kind ever launched here, will open in the Midlands during the next two years: it will be part of a network of NGCs across Europe.
The first NGC was launched last week in Ludwigsfelde, south of Berlin. It is expected to sell 1,700 used CVs a year, earning a £32m turnover by 1998 from vehicles of all marques, mainly over 7.5 tonnes.
A spokesman for M-B in Germany says the UK NGC is expected to grow to the same scale as its German counterpart, but denies it will compete with franchised dealers.
European commercial vehicle sales manager Volkmar Seidel says: "There will be no difference in price between ourselves and the franchise dealers. We do not intend to compete with our franchise dealers—we don't want an internal war."
But some of the UK franchisees are worried by the move, which they have not been consulted about. On average their used sales account for 30% of turnover. Most used business is generated by selling contract buy-backs. The sales director of one major franchise dealership says of the UK NGC: "I do think it's a negative move and they shouldn't be doing it." A director of another leading franchisee says he wants M-B to supply a written undertaking that it will continue to supply him with used vehicles from its fleet sales arm, Mercedes-Benz Finance, and its leasing operation, CharterWay.
A spokesman for M-B's UK subsidiary says it is too early to confirm that this practice will continue. Used vehicles are currently sold by M-B to dealers on a bid basis; there is no guarantee of secondhand supply within current franchises.
It is not yet known if franchisees will be expected to sell to the NGC, or if an agreement will be sought to include franchise dealer-held stock on a NGC databank.
A spokesman for M-B in Germany says German franchise dealers will benefit from the Ludwigsfelde NGC in four main ways: • They can sell to the NGC and will be paid in cash within 24 hours; • They will get more sales support to sell new trucks; • They will get more money from the marque to sell used vans under 7.5 tonnes; • Residual values will improve.