Mercedes dealer review opens home front in luxury war

Wed May 22, 2013 5:54am EDT
 
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By Christiaan Hetzner

FRANKFURT (Reuters) - How many Mercedes staff does it take to sell a car? The answer, in the luxury carmaker's German showrooms, is more than it takes to shift an Audi - just part of the cost gap Daimler wants to close with its premium rivals.

Among the top three, Mercedes depends on its unprofitable company-owned dealerships for a bigger share of domestic sales than either Volkswagen's Audi or BMW, which rely more on franchises.

Now, according to documents seen by Reuters, Chief Executive Dieter Zetsche is targeting the company's "own retail" operations as part of a promised 2 billion euro ($2.6 billion) savings drive.

Daimler, already in talks to sell four German outlets, could mount a bigger sell-off if those transactions go well, a person familiar with the company's thinking told Reuters.

"Management wants to try this out to see exactly how it would work in practice," said the person, who asked not to be named.

"They are gathering experience that could serve as a blueprint," he said, adding "Zetsche is no fan of own retail."

The rethink opens a home front in Daimler's battle to lift profitability to the 2013 operating margin target of 10 percent it set three years ago, only to shelve it in October.

Zetsche, 60, has so far failed to put Daimler on course to keep its pledge to overtake Audi and reclaim the crown from BMW by 2020 - or even trim their lead in sales and profit. Daimler further cut its guidance late last month.   Continued...

 
Mercedes-Benz cars are displayed in a dealership of German car manufacturer Daimler in Munich May 17, 2013. REUTERS/Michaela Rehle