M-B gets ready for electrification

Mercedes-Benz management had a clear message for the brand's U.S. retailers at their NADA make meeting: Electrification is coming, and the network must get ready to sell and service the next generation of vehicles.

The luxury automaker is gearing up to bring a fleet of battery-powered vehicles to the U.S. by the end of next year. Plans call for up to three electric utility vehicles and two sedans, including battery versions of Mercedes' premium S-Class large sedan and GLS large SUV.

"The market is more ready for these products than I think it has been at any time in the last few years," Mercedes-Benz U.S. sales chief Adam Chamberlain told Automotive News after the virtual meeting.

Mercedes will take a targeted approach with its sales strategy as it rolls out its EQ subbrand in the U.S., focusing efforts initially on 20 EV-friendly major metro markets through a group of 60 to 80 pilot dealers.

"What we don't want to do is force cars onto dealers in rural settings without much opportunity," Chamberlain said. "We know that 80 percent of EV sales happen in 20 markets nationally. Let's be focused on those markets where the opportunity is, where the dealers can get a return on investment and get some sales cadence, and we can bring confidence to the EQ brand."

At the meeting, Mercedes' new U.S. CEO, Dimitris Psillakis, had his first chance to address the dealer network and lay out his direction for the brand.

"He really wants to roll up his sleeves, work hard and make his mark — and clearly, that's going to be the transition to electric vehicles," said Jeff Aiosa, owner of Mercedes-Benz of New London in Connecticut. "That is his No. 1 challenge, and that's front of mind."

But he added: "I don't want to get carried away — clearly, there still remain huge challenges for us."

But replenishing inventory in the wake of the pandemic was on dealers' minds during the meeting. Inventory is about 20 percent higher than it was in September, Chamberlain said. But brisk Mercedes sales in December and January mean inventories are still tighter than many would like, he said.

"It's a little bit less than optimal but nowhere near as bad as where we came from in the second half of last year," Chamberlain said.

Retailers raised concerns about tight vehicle supplies affecting their ability to hit their performance targets and affecting their margins, said Aiosa, who is also the NADA brand rep.

"They didn't say that they're going to give us a pass on it, so to speak," Aiosa said. "They just said that it's a topic of conversation."

Challenges aside, Chamberlain struck an optimistic note. "We see more opportunity in 2021 than headwinds," Chamberlain said. "After a really challenging 2020, in which our dealers did an amazing job, we think that we'll have a little bit more tail wind behind us this year."