A
corporate retail presence is core to the Mercedes-Benz philosophy and its
operations world-wide, he explains. That has been the case in Canada since
operations began here in 1955, initially in conjunction with Studebaker. Direct
involvement with the customer helps in understanding the market and the retail
environment, Breitschwerdt says. "It gives us a better-balanced position...
helps us determine what the market needs... lets us see first-hand what is going
and what is not."
It
also permits the company to develop meaningful dealership standards and to try
out new processes and programs before applying them to the dealer body as a
whole. "We wouldn't ask a dealer to do something we wouldn't do ourselves," he
says. "We always try it ourselves first." In addition to the 13 full-service
dealerships, the company also operates four service-only or body-shop
facilities. While some corporate retail is important, he acknowledges, "We
shouldn't have too much. We are at our upper limit in Canada for sure."
As
head of both wholesale and corporate-retail operations, Breitschwerdt sees
himself as a "moderator" between the two. Of course, he cannot involve himself
in the operation of "his" individual retail stores on a daily basis. But he
does so in weekly meetings with retail-division vice-presidents for the
Vancouver and Toronto regions, and a general manager for the Montreal area, to
whom the individual sales and service managers each report. There are four
corporate outlets in Vancouver, seven in Toronto and London, and
two
in Montreal. They get exactly the same treatment as an independent, he says,
and each one
is
profitable.
Private
dealers are crucial
Those
factory stores are complementary to the independent dealerships, which
Breitschwerdt characterizes as playing a "crucial role" in their individual
markets. The relationship with those dealers is not top-down; "It is truly a
partnership," he says, noting that most are long-term associations - some for
more than 40 years.
That
is a key point for Mercedes-Benz. "We value and strive for long-lasting
relationships - with our suppliers, our dealers, our employees, and our customers,"
he says. Not surprising, perhaps, given that the company's origins date back
120 years, to 1886, when Karl Benz and Gottlieb Daimler, each on their own,
"invented" the automobile.
Breitschwerdt
is very happy with the current dealer network, which has no glaring open
points. Rather than expanding into new areas, or just adding dealers, he
prefers to develop existing market areas to increase sales and get "the right
share," without jeopardizing anybody's investment. "If you do what is required,
you have a right to maintain your territory," he says.
The
company began "beefing up" the private dealer network about three years ago,
Breitschwerdt explains. That process involved construction of many new or
renovated facilities, and five or six more are currently under way. "We have
invested a lot, together," he says, as he leafs through pages of building plans
and lists off the dealerships that have been through the process: Montreal,
Ottawa, Surrey, Windsor, Halifax, Granby, Laval, Edmonton, and more. One new store
built in Ajax, Ontario, just a few years ago, is already too small, and is
about to move to a new and larger location in nearby Whitby. Noting that the
company maintains a facility fund for private dealers, he says it will continue
to invest.
Dealerships
reflect brand philosophy
Not
surprisingly, the company's own retail facilities have served as prototypes for
today's private dealerships. The look is similar not just across Canada, but to
a great extent, around the world. That consistency is important, Breitschwerdt
says, because the dealership directly reflects the Mercedes-Benz brand and
attitude. Key elements of that brand philosophy are "approachability and
transparency."
To
that end, the buildings are wide-open in concept, with glass walls between the
sales and service areas. High ceilings integrate the whole world of
information, sales, and F&I into one process, he explains, as he walks
through the Midtown showroom in Toronto, which is a "reference store" for
mid-sized dealerships. Rather than hiding in cubby-hole offices, sales desks
are out in the open, scattered around the showroom floor. A mixture of light
and bright colours, high-quality materials, ample lighting, and exposed
construction elements emphasize both luxury and technology, in a manner that is
neither pretentious nor intimidating.
Taking
transparency a step further, customers can do more than just watch "their
technicians" work on their cars through a glass wall - a concept Mercedes-Benz
pioneered in Canada, according to Breitschwerdt. They can go right into the
shop and watch or talk with them, from behind a concrete barrier that defines a
walkway inside the glass. There is no sense of secrecy or isolation in either
the sales or the service process. "It's the way we do business," he says.
One
critical element of dealership design, in Breitschwerdt's opinion, is the
dedicated delivery area - not to be encroached on by any other function.
"Delivery is the biggest moment in a customer's experience with a car - the
moment when they meet for the first time. In many cases it only happens once
every few years, so it shouldn't be done by a car jockey." Reinforcing the
importance of the occasion and the process, he notes, factory delivery in
Stuttgart is still a popular option among Canadian customers.
Of
course, the product also plays a major role in both attracting and maintaining
customers. Mercedes-Benz's once-bulletproof reputation for quality and
reliability has taken a bit of a beating in recent years, but that aberration
has been dealt with, according to Breitschwerdt. "We had to do some homework
and we did it," he says, crediting corporate chairman Dieter Zetsche with
personally spearheading that effort. "Now we are seeing the results. There were
some real issues with customer perception. We had to make sure quality is
something customers don't even have to consider with a Mercedes-Benz - it will
be reliable!"
Beyond
that, he noted, "We've got the most exciting lineup we've ever had." That
excitement is being reflected in sales, which are up over 36 percent for the
brand, in Canada, year-to-date through April. That increase comes from a
combination of strengths, including major revisions to existing models such as
the M- and S-Classes, and entries into new segments with vehicles such as the
B- and R-Classes. The C-Class, which is the cornerstone of the brand, continues
to sell well, and its replacement is due a year or so downstream, all of which
bodes well for the future.
In
addition, both the SLR and the AMG products are doing "spectacularly well"
here, Breitschwerdt says. Canadians appreciate the genuine performance that
they offer. Maybach is meeting its targets, and its customers love the car, he
adds, but this is not a big market for cars of that type.
Smart
car sales soared through most of 2005, helping keep combined numbers up while
dealers waited for the Mercedes-Benz product onslaught that is now here.
Although sales of the smart fell off a bit earlier this year, they rebounded in
April - "way over targets" - to the extent that Breitschwerdt now has some
concern for supply. There is no question about the brand's future in Canada, he
says. In fact, the Canadian experience is the prototype for what will now
happen world-wide: specifically, focus on the fortwo model and integrate the
smart brand fully into the Mercedes-Benz network, with shop-in-shop facilities.
Canada,
in fact, is something of a test market for the world, Breitschwerdt says.
"Contrary to what many people think, it is not just 'like the U.S. but smaller.' It is completely
different - a unique market that is midway between Europe and the U.S."
Naturally,
Breitschwerdt is pleased with the company's current sales success, but "that is
not the most important thing," he says. "We want to have sustainability." To
that end, the company is expanding its product offerings, segment by segment,
following the European model. It is not a case of moving down-market, he
explains, but of expanding the brand's market.
Mercedes-Benz
products will continue to be "innovative, advanced, and luxurious," he says,
but within individual segments, not just at the upper levels of the market. "We
won't be the cheap one in a segment. We are not a discounter! But we will offer
the best solution for a customer at an absolutely astonishing price." From the
beginning, he adds, Mercedes-Benz has built vehicles for people who realize
that "the cheapest solution is not the really-cheap solution" - a point
frequently confirmed when the brand's life-cycle ownership costs are compared
with those of cheaper models.
It
is people that deliver the passion
As
much as product drives the business, and facilities establish the atmosphere,
it is still the people that sell the cars, Breitschwerdt says, and he is
particularly proud of those in both the company and the dealership. They are in
a special situation, compared with those of other brands, he explains: "At
Mercedes-Benz, we are not in the transportation business... we are selling
dreams and emotions... something close to people's heart and soul. That's why
our people are so important. They are the link between the customer and the
product. They have to deliver that passion."
Understating
the point, he says, "We have a very, very strong brand," adding that, "It is
all about authenticity; it is not an artificial brand." It is not just the
sales staff that is responsible for conveying the passion inherent in that
brand. "A salesperson may make the first sale to a customer,' he says. "But the
second, third, and more are sold by the service department. Our customers don't
just buy a car. They buy a brand experience."
The
first priority of the service department is to create a positive interface with
the customer - to become friends and helpers," he explains. "That's what
creates the ownership experience, and makes the case for whether or not the
client returns." To that end, at Mercedes-Benz dealerships, service is not
relied on as a full-absorption department. "If it is, that's fantastic," says
Breitschwerdt, but "that is not the priority."
Compared
to most dealerships, "We have a very loyal staff," he notes, adding that the
brand and its heritage are key factors in that loyalty. It is a mutually
advantageous relationship, he explains - "a real partnership." In addition,
both the dealerships and sales reps make good money, he says. "We have changed
the compensation system for sales reps and managers, basing it on both sales
revenue and CSI success." That change moves their focus from just the
short-term to include the mid-term.
Training
is a big part of the relationship - not just for technicians but sales staff as
well. Over 1100 dealer personnel attended training sessions at head office in
Toronto in 2005, and there are additional training facilities in Vancouver.
Challenges
Breitschwerdt
sees sustainable growth as the major challenge in the future, both for the
company and for its dealers. "We need to make an effort to keep the amplitude
as tight as possible," he says, "and to deliver the right product to customers
to satisfy their needs and their dreams."
To
that end, "We have to keep learning and improving," he says. Invention and
reinvention is what the company is all about. "We can never know it all. We are
a learning organization - that is the only way to succeed as an organization
for 120 years."
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