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Mercedes Dangles Bounties Pushing Dealers for Top Service

A Bellagio casino staffer wheeled $60
million in poker chips onto the ballroom stage to show the value
of improving service at U.S. Mercedes-Benz dealerships.

The chips represented the bonus dealers can earn for higher
customer-service ratings. Daimler AG’s Mercedes explained the
happy-customer bounty at the dealers’ annual meeting in Las
last year. The company is improving how it surveys
customers, and the stores ranked in the top half will divvy up
the extra cash. As U.S. sales grow, so will the pool.

German premium automakers are introducing a wave of
initiatives, big and small, to help the shopping and service
experience match the luxurious and pricey vehicles they sell.
Bayerische Motoren Werke AG’s BMW is adding so-called genius
shopping assistants, like those at an Apple store. Volkswagen
AG’s Audi is expanding hours and adding services. The three rank
near or below average in dealer-shopping experience, according
to J.D. Power and Associates.

“We’ve languished in the middle of pack the last 10
years” in terms of service, Steve Cannon, head of sales for
Mercedes-Benz in the U.S., said in an interview. “It’s almost
cognitive dissonance to say Mercedes-Benz is in the middle of
the pack.”

The three brands rank in the top six for appealing
vehicles, according to a separate J.D. Power survey. When it
comes to customer service, the rankings are led by Japanese and
American brands. Toyota Motor Corp. (7203)’s Lexus rank first, followed
closely by Nissan Motor Co.’s Infiniti. General Motors Co.’s
Cadillac and Ford Motor Co.’s Lincoln rank third and fourth.

‘Ultracompetitive Market’

“As the products get better, the biggest differentiator in
this ultracompetitive market will be the customer experience and
the absolute power of the brand,” Cannon said.

Every sale counts as Mercedes and BMW duel again this year
to be the top-selling luxury brand in the U.S., having pulled
away from Lexus. BMW has sold the most luxury vehicles in the
U.S. the past two years, based on reported sales. By vehicle
registrations, Mercedes topped BMW last year, according to
researcher R.L. Polk Co.

Mercedes widened its 2013 lead over BMW in October to
almost 5,000 vehicles. The figures don’t include Daimler’s cargo
vans and Smart cars and BMW’s Mini brand, which aren’t luxury
vehicles. Audi, the fifth-best selling luxury brand, said its
sales rose 11 percent in the month. That’s a bigger increase
than No. 4 Cadillac and smaller than No. 3 Lexus.

Industrywide sales rose 11 percent in October and 8.4
percent through 10 months, keeping the market on pace for its
best year since 2007.

BMW’s Geniuses

BMW, which ranked below average in the J.D. Power study, is
taking a cue from Apple Inc. (AAPL)’s retail stores, where salespeople
roam the showroom floor, offering advice with no strings

BMW Geniuses, one or two per store, donned in navy blue
polo shirts, will offer advice with no threat of a salesman’s
push. They’ll be paid a straight salary or wage with no

The Geniuses are in 19 dealerships as a pilot program. By
the end of next year, 500 of them will be working in stores in
all major U.S. markets, Peter Miles, executive vice president of
operations for BMW of North America, said in an interview. The
idea is to address the way shoppers buy cars now, providing a
bridge from their online research to the actual transaction with
a salesman.

“There’s substance in our engineering,” Miles said. “You
have to have the ability to explain that in a way customers are
interested in hearing it — or bragging about when they own a

Audi’s Approach

Audi is taking a practical approach, adding weekend and
evening hours to let buyers pick up their new cars at times and
locations convenient for them. Its new Manhattan store offers
valet parking. Audi dealers are using scanners and other
technology to speed or eliminate the paperwork required in
dropping off a car for service or applying for a loan.

“We spoke to people who fly a lot,” Scott Keogh,
president of Audi of America Inc., said in an interview. “You
can have wine on a plane and good food. Most people in business
class don’t care. They want to know was the plane on time? Was
the seat comfortable?

‘‘We zeroed in on this.’’

Aiming Younger

The big German luxury brands are trying to improve service
to win over the new, younger customers the brands aim to draw to
their dealerships with the most affordable lineup of cars they
have offered in the U.S. Younger buyers are more resistant to
the car-buying experience, so the idea is that better treatment
can keep the experience positive.

‘‘It makes sense that they’re trying to address this now as
they bring in the younger generation of buyers, who have proven
to be less brand loyal, and more willing to hop around, if they
don’t get the service they expect,” said Alec Gutierrez, auto
analyst for Kelley Blue Book.

Mercedes is at the early stage of introducing 30 new or
refreshed vehicles over the next seven years. Some, like the
$30,000 CLA, are designed to lower the brand’s average customer
age. Audi and BMW are also targeting new, younger buyers with
entry-level cars like the Audi A3, priced at $29,900, and the
BMW 1 Series, which starts at $31,500. The top-of-the-line Honda
Accord, by comparison, starts at $33,480.

The power of social media also heightened the urgency,
Cannon said. Through consumer review websites such as and, a customer’s bad experience can
now be echoed exponentially and instantly.

“Through social media, the multiplication tables have
changed dramatically,” he said.

7203 JT equity
F US equity
GM US equity
VOW GY equity
DAI GY equity
BMW GY equity


To contact the reporter on this story:
Mark Clothier in Southfield, Michigan, at

To contact the editor responsible for this story:
Jamie Butters at

Infiniti Q50 Sedan Unveiled at Detroit Auto Show

Jan. 15 (Bloomberg) — Nissan Motor Co. unveils its Infiniti Q50 luxury sport sedan at the 2013 North American International Auto Show in Detroit.
The Q50 will be available this summer in North America with a 3.7-liter V6 engine or 3.5-liter hybrid powertrain. All versions will come with a seven-speed automatic transmission. (Source: Bloomberg)

Mercedes's Stephen Cannon on New Models, Outlook

Sept. 10 (Bloomberg) — Stephen Cannon, chief executive officer of Diamler AG’s Mercedes-Benz USA LLC, talks about new model introductions by the luxury-vehicle manufacturer and the outlook for sales.
Cannon speaks with Sara Eisen, Tom Keene and Scarlet Fu on Bloomberg Television’s “Surveillance.” Jeffrey Sachs, a professor at Columbia University, also speaks. (Source: Bloomberg)


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