TORONTO -- The fierce competition in Canada's vehicle market has caused Mercedes-Benz Canada Inc. to completely transform the way it does business here -- from sales, to service, to the look of the company's dealerships, says president Marcus Breitschwerdt.
Before the market peaked in 2002, Mercedes sold vehicles in an old-fashioned, European way, Mr. Breitschwerdt said in an interview after guiding a visitor on a tour of the dealership attached to the firm's head office in midtown Toronto.
"You opened a nice store, you could trust that the company will introduce a nice product and people will walk into your dealership and ask for the product and ask for the price and they love it," he said. Buyers were told to return in four months and they would do so.
But after rivals "pushed like hell," Mercedes began revamping operations. Starting that year, the company and its dealers began work on a refurbishment of its stores that will cost more than $100-million by the time it's complete next year.
The auto maker broadened its market reach and scope in Canada by bringing in the B-Class compact car, which is not sold in the United States and was the second-biggest seller for Mercedes here last year.
The sales and service process has been upgraded, he said.
"You cannot just say we have to introduce a customer satisfaction process. You have to bring the process into the architecture somehow."
The result of those changes and others was a reversal last year of a three-year slide in sales and a record high for the Mercedes brand. It was also a record year for the company as a whole when sales of Smart brand minicars and Maybach limousines are included.
What's most critical, however, is still what drives most customers of any brand and that's quality.
"We cannot have a situation in which a Mercedes is not top-notch quality," Mr. Breitschwerdt asserted.
Quality concerns have risen to the surface again, however, after Consumer Reports magazine rated the company last in reliability among 36 brands whose vehicles it tested. The quality issue is something Mercedes needs to address, said Richard Cooper, executive director of the Canadian operations of consulting firm J.D. Power and Associates.
J.D. Power ranked Mercedes below the industry average last year in its annual study of initial vehicle quality. Mercedes was ahead of arch-rival BMW AG in the North American-wide study, but trailed Audi AG and the Lexus division of Toyota Motor Corp.
"They were at one point the gold standard for quality," Mr. Cooper said of Mercedes.
But he figures Mercedes has caught a wave with its diesel strategy. J.D. Power is expecting diesel-powered vehicles to double their market share by 2011, he said, to a little less than 10 per cent of the market.
Diesel engines are a clear answer to environmental issues, Mr. Breitschwerdt said.
"A diesel giving you 30 per cent better fuel consumption can immediately cut down on everything," he said. "Fuel is available, the infrastructure is available, the technology is available."
Diesels represented less than 10 per cent of Mercedes' brand sales of 14,544 vehicles in Canada last year, although all its Smart cars are equipped with diesel engines.
Last month, however, 41 per cent of the sales of the R, M and GL-class sport utility vehicles and E-class sedans came from diesel models.
"We believe there is a potential and we believe that we have to contribute," he said.
Mr. Breitschwerdt hedged when asked if his aim is to make Mercedes the top seller in the luxury market.
It depends on how luxury is defined, he said.
If the definition is purely by brand name, BMW Canada Inc. was the leader in sales volume last year when deliveries of its Mini are included.
"If you would say luxury is above $50,000, there is no doubt that we are No. 1," he said.
But the competition that sparked the changes at Mercedes is relentless.
Around the corner from the dealership on Eglinton Avenue and the Mercedes head office in Toronto is a showcase BMW outlet.
And Toyota has plans for a Lexus dealership just down the street from BMW.
© The Globe and Mail
