Free Maintenance May?

http://www.autoevolution.com/news-image/

In May, as a purchasing incentive, Mercedes-Benz USA is offering free scheduled maintenance for most of their certified pre-owned vehicles. Dealer managers are fans of the program as they believe that not only will it inspire new customers to visit Mercedes but it will also give customers a reason to use the dealers’ service department instead of others. In the short run it does remove a significant source of income but dealers believe that it will be outweighed in the future. The president of the Mercedes-Benz USA Dealer Board, Jay Agresta, noted, “Yes, you do lose the opportunity to sell that one product, but it does tie the customer to our service department. It’s an attractive incentive to get customers in the door, and it gives them an incentive to come back in the future, so it benefits us two ways.”

I just thought that this was an interesting article, especially following our class speaker yesterday. He had emphasized the service department and warranties as a significant source of income for dealers. This program takes away income from both in the short term, but hopefully will add to the companies’ income overall in the longterm.

Source: http://www.autonews.com/article/20140514/FINANCE_AND_INSURANCE/305149996/mercedes-dangles-free-maintenance-on-select-pre-owned-models#

5 comments to Free Maintenance May?

  • heardd16

    Your quote from Jay Agresta reminds me of our something our visiting alumni said yesterday. Amenities like repair shops and cheap tires other examples of attractive incentives that may not be profitable in and of themselves, but which boost sales of other products by attracting more customers.

  • Kuangdi Zhao

    Our guest speaker yesterday said that the most profitable business segments for car dealers are parts, finance, and service. Therefore, by attracting more new customers and convince them to come back, Benz dealers can be benefited from this incentive program in the long run.

  • Kade Kenlon

    Although this seems like a great idea in theory, I think most people will utilize this free service while it is available and then they will return to their regular repair shops. The costs of maintenance at dealerships are very lofty, so as long as local repair shops are doing just as well and finishing the job just as quickly, there is really no reason for consumers to spend the extra money.

  • Peter Wittwer

    This seems like a peculiar strategy. After looking at the balance sheet it seemed like the majority of income for dealerships comes from the service department. Maybe Benz is so confident in their new models that just getting people into the door will be a great way for them to market their new models. Or maybe they’re making significant changes to their service department where they want Benz owners to experience it and then want to come back for servicing in the future no matter what the price does in the future.

  • Note this is paid for by M-B, not the dealership. It gets people to return to a dealer with potentially good treatment, and to see prices. Note, too, that getting a luxury car fixed at a regular car repair shop can be a challenge – independent repair shops may have to buy “original” parts from the dealership or see their CPO warranty voided. Some cars require special tooling, or a very particular list of services to meet CPO specs….yes, an oil change MAY be cheaper, but if you can be in-and-out exactly when promised at a full dealership, well time is money for those at the luxury end of the market.

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