Mem trims its network
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by Toby Clark • Mercedes-Benz is radically restructuring its UK truck and van dealer network, cutting the number of franchise holders from 56 to 26 and separating its light commercial and truck sales operations.
While the number of dealer businesses will shrink, there will be at least as many sales ancl service points: Mercedes expects many franchise holders to operate from more than one site, and to run distinct van and truck showrooms with separate management.
Mercedes-Benz (UK) managing director Paul Halata stresses that change is vital: "We've got to have customer focus," he says. "The split of product divisions has given us that"
Profitable
But he adds that the biggest change will be for dealers: "The creation of bigger dealerships is also the way to sound and profitable dealerships capable of serving our customers better."
The move will be overseen by commercial vehicles director David Thomas, who will retire next spring We want to encourage merger and takeover," says Halata. "We think there's a win-win situation for dealers; we hope we can present a situation where all of them can see an opportunity."
However, Mercedes has no plans to buy-in any dealers. "Dealers know their business and we know ours," says Halata. "We think an independent dealer network is right for us. We want strong partners—we don't care whether they are PLCs or private companies."
The split between light and heavy commercial operations reflects the market: heavy commercials are increasingly sold to fleets, while vans can benefit from metropolitan retail sales operations.
The Vito and Sprinter vans (at up to 4.6 tonnes GVW) will spearhead the light vehicle campaign, while the six-tonne Vario will be the lightest vehicle dealt with by the heavy division. The restructuring is planned to coincide with growth in MB (UK)'s business.
The experiment is being watched carefully by other European distributors; Mercedes-Benz is considering setting up a separate van division in Germany. The UK changes will not cost any jobs: if anything, the number of employees will increase.
Lj Mercedes' latest "product offensive" started two or three years ago with the Sprinter van and has continued with the Vito, the facelifted I,N2, the Vario and the Actros.An all-new middleweight range will arrive next year, while the Sprinter is due for a facelift in 1999.
From initial UK sales of 9,000 in 1995, around 20,000 Sprinters are predicted to be supplied in the UK next year. No market growth is expected for heavy vehicles in the immediate future, but Mercedes believes a 20% market share could be achieved within three years.
Despite a late launch, there have been around 1,400 orders for the Actros in the UK so far this year. • Mercedes dealer Mike Mudie, of Kidderminster-based Mudie-Bond, is chairman of the National Franchised Dealer Association's Truck Council. He's cautiously enthusiastic about Mercedes' plans: "The overall principle is right," he says. "For truck dealers to be viable there have to be fewer of them. The ple of concentra tion and separation between market segments is a good one; we already split our operation between lights and heavies. It has to be done."
But he has yet to discuss what the change means for Mudie-Bond. "We don't know the details yet."