MBUSA Headed for Another Record Year

NEW YORK – Barely into his second year at the helm of Mercedes-Benz USA, Ernst Lieb predicts a 14th consecutive year of volume growth for the luxury importer in 2007 and says he is confident next year will bring additional gains.

Through November, Mercedes has sold 225,941 light vehicles in the U.S., up 2.8% from year-ago and on pace to exceed entire-2006’s 247,887 units. C-Class sales, alone, are up 26.3% from like-2006 to 56,802.

But Lieb says the achievement he’s most proud of in his first year here is revitalizing relationships with Mercedes’ 334 dealers.

“It puts us in a different position for years to come,” he says. “It will help us build a better business down the road.

“We have to convince them we are trustworthy as a partner and deserve their best people in their Mercedes-Benz dealerships,” Lieb adds, noting 85% of Mercedes dealers also have other franchises.

A new franchise agreement calls for dealers to invest $1.4 million in their Mercedes showrooms over the next three years. A dealer that does that and meets other key targets would be entitled on average to a 2.5% margin increase on each unit sold. About 60 dealers already have committed to making the investment in order to qualify for the bonus payouts.

Lieb says Mercedes dealers are happy with the current product portfolio. But he says more models are on the way, starting with a new C63 that goes on sale in late spring. That high-powered car will account for only about 1,500 units, but it lends a halo effect to the C-Class.

E320 diesel slow mover in California.

Mercedes also will benefit from a full sales year for the ’08 C-Class, which hit the market midyear, and the launch of the new SL due in April.

“Our dealers love it,” Lieb says of the high-end SL roadster.

At the North America International Auto Show in Detroit, Mercedes will unveil the new GLK model designed to compete with the BMW X3. However, the small cross/utility vehicle is not scheduled to go on sale until 2009.

In addition, Mercedes expects to boost diesel sales as availability of its BlueTec engine broadens to all 50 states next year. About 100 BlueTec diesels were offered for lease in California late this year, marking the first Mercedes diesels available in that state in years.

Despite the limited volume, Mercedes hasn’t moved all 100 BlueTec cars yet. Lieb concedes the 2-year lease on the E320 was not a customer-friendly deal. “Customers usually want to buy diesels,” he says.

Lieb says he also is seeking to simplify model options and choices to lessen the burden on dealers to maintain expensive inventory.

Like all European car makers, Mercedes is adversely impacted by the strong euro. However, Lieb says Mercedes is maintaining its profit margins through currency hedging and huge efficiency gains in its factories. It also benefits from the weak dollar when it exports Alabama-built trucks to Europe and other overseas markets.

Lieb is determined not to cut back marketing expenditures in order to maintain margins in the U.S. “But we’re getting more bang for the buck when marketing new models,” he says.