Last week Mercedes-Benz Canada held the grand opening of its newest factory store, a 65,000 square-foot colossus on re-claimed industrial land just outside Vancouver’s downtown core.
My first thought: this multi-story, steel and glass dealership – a see-through airplane hangar filled with sedans, sports cars and SUVs – is a monument to optimism or corporate self-delusion. Likely the latter.
Then, I was taken aside and schooled by Mercedes-Benz Canada’s president and CEO, the ultra-energetic, tall-as-an-NBA forward, Tim Reuss.
Yes, yes, he said, Mercedes plans to sell 2,000 new cars out of the new corporate-owned dealership, and another 1,000 certified pre-owned cars. That’s up from 1,200 of the former and 500 of the latter out of the old shoebox-sized Vancouver dealership on Broadway.
Mercedes has more cars for the masses than ever before. The new CLA sedan starts at about the same price as a well-equipped Honda Accord, the B-Class wagon costs even less, and the coming GLA SUV will be in the same ballpark. Last year, Mercedes in Canada sold more than 34,000 Mercedes-brand cars, says DesRosiers Automotive Consultants, and sales are up in double digits this year.
“Let’s talk about the massiveness (of this and another gigantic Mercedes dealership about to open just a 15-minute drive away),” Reuss says as we tour his latest corporate bauble. “They look big, but in both facilities the most important part is not the showroom; it’s in back, the service area.”
Reuss’s argument is that Mercedes’ sales in Canada have out-paced the ability of its dealerships to provide timely service for all the new buyers.
“We’re playing catch-up in Canada; we don’t have sufficient workshop capacity and we’ve only started catching up,” he says, adding, “Service capacity is a big part of customer satisfaction. If you have too-long waiting lines from a growing portfolio in the market, you’ve got to address that.
“If you have to wait for a scheduled service beyond a few days, that is a problem. And we’ve had that problem across Canada. Only now we're alleviating that.”
The new Vancouver dealership has 22 service bays, but they will function like 44 because of over-lapping shifts among the service technicians. The dealership itself is three stories tall and aside from two showrooms, boasts a couple of hundred parking spaces for a very good reason: space is needed for all those cars getting regular service and repairs in service bays that are being utilized to the max.
“Both stores are mainly about the service side,” says Reuss again emphasizes. “It is not just about the bricks and mortar, but also about having the logistical space around it so you can best utilize the work bays. If you don’t have enough space to store cars, then you can’t do that.”
Premium buyers, of course, are impatient and unwilling to wait long for an oil change and many don’t like booking service appointments far in advance. Dealerships must adjust to that reality, says Reuss.
But at a cost in Vancouver that some speculate lands somewhere between $20 and $30-million dollars for this new store, land included. And you thought it was easy to profit selling luxury cars.
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*Correction: Both new stores will be in Vancouver. The second one is moving from Burnaby to the border of Vancouver and Burnaby, but will officially now be in Vancouver. An earlier version of this story said it would be in Burnaby.