How much does it cost to open a Mercedes Benz dealership?

In this blog, we will find out how much does it cost to open a Mercedes Benz Dealership? And answer the following questions: what are the different departments in a Mercedes Benz Dealership?

How much does it cost to open a Mercedes Benz dealership?

It can cost millions of dollars to open a Mercedes Benz dealership. The land must be acquired or rented and the cost of construction alone can go to approximately 4-6 million dollars. 

The expenses do not stop there as the dealership will need manpower to operate. Mercedes Benz has a strict set of guidelines for the organisational structure for the operation of an authorised dealership. 

Once all the manpower is hired, costs for the equipment like vehicle lifts, tool kits, air conditioning systems and electricity bills must also be considered before signing up to be a franchise partner.

In some markets, Mercedes Benz AG also requires the dealership to maintain a stock of spare parts and new cars. Therefore, the cost of opening the dealership can increase as Mercedes Benz parts and new models are not cheap and the dealer principal cannot sell all the stock quickly. 

It takes a lot of liquid funds and loans from banks to open a Mercedes Benz dealership. Even if the land is rented, every month all the employees will need salaries and there will be an operational cost for the dealership. 

In countries like China, the rent or cost of land is at a premium. Mercedes Benz needs a large area to set up a dealership because a dealership is made up of sales, service Body Shop and parts divisions. 

It can cost CNY 20 million to 60million, or about USD 3 million to 9 million USD in China to open a Mercedes Benz dealership. CNY 20 million- 30 million is the bare minimum required amount and Mercedes Benz won’t even consider the application without liquid funds in hand.

What are the different departments in the Mercedes Benz dealership?

The different departments in the Mercedes Benz dealership are as follows

Sales

The sales department in a Mercedes Benz dealership is responsible for handling the sales operation. There is a vehicle preparation centre which is part of the sales department. Its task is to unload the vehicle coming from the factory, check for any damages and malfunctions present in the vehicle and process accordingly. 

If there are faults in the vehicle then VPC can raise a special warranty claim or if the invoicing is already performed; the fault can be rectified under the standard warranty of the vehicle.

The sales department is the face of the Mercedes Benz dealership, the walls are all made up of transparent glass to allow maximum light into the sales area. The natural light helps customers to see how the cars look in the natural lights. 

The sales department is also responsible for test drives, customers can ask for a test drive by walking into any authorised dealership or booking a test drive from the official website. When the customer enters the dealership, they can wait in the Mercedes Benz cafe until a sales executive is with them. 

The sales executive gives a small presentation on the Mercedes Benz and the different products available in the dealership. Once a customer makes a final decision, the invoicing, registration of the vehicle and vehicle delivery is all tasks of the sales department.

Front office

The front office is the face of the after-service department, it is usually located in the service area of the dealership. The front office consists of a welcome area with a dedicated receptionist. Service writers or advisors will attain the customers and guide them through the service process. Customers can also book appointments for a test ride from the official online website or by directly calling the nearest dealership.

Workshop

The workshop department consists of vehicle lifts and necessary special tools as specified by Mercedes Benz. As the car uses lots of advanced driver assistance systems, they need special tools for calibration and replacement purposes. The workshop consists of certified technicians and a job controller to distribute the work orders.

All the cars go through a final inspection after completing the periodic maintenance or general repairs. The final inspection is performed by a quality inspector and after the inspection is over the vehicle then goes towards the delivery area after washing. In some dealerships, an interactive session is also carried out with the customers. This is done to explain the scope of work to the customer and also suggest any additional repairs.

Bodyshop

Bodyshop at an authorised Mercedes Benz dealership also consists of dedicated vehicle lifts and specialised vehicle chassis aligners. Mercedes Benz gives all the technical training to the body shop expert. The repairs are all performed by certified technicians and even after a vehicle is repaired after an accident, it will be as good as the day it left the factory floor. There are special paint booths and all the Mercedes Benz dealerships have access to special electronic parts catalogue and workshop information system to perform the repairs.

Warranty department

Mercedes Benz provides a minimum standard warranty of 3 years and it can go up to 5 years depending on the market. All the warranty claims are raised by warranty executives present in the warranty department in authorised dealerships.

The Mercedes Benz warranty process involves collecting photographs, Xentry reports and audio or video recordings of the fault. After collecting the required evidence of the fault, the warranty executive will raise a claim on the Mercedes Benz warranty portal known as EVA. The work can be performed once the warranty claim is settled and a genuine part is available for replacement. If any part is replaced, it is returned to the warranty department.

Parts and accessories

The spare parts division is responsible for ordering new parts and also maintaining an inventory of regularly used parts. Regularly used parts are service materials, oil filters, air filters and suspension nuts and bolts etc. After the sales, it is the second most expensive department as the spare parts are not only responsible for the parts required for service and general repairs but also the accessories sold by Mercedes Benz. 

Some of the other departments are human resources, Accounts and administration. A Mercedes Benz dealership is pretty much similar to any organisation and the annual turnover can be in millions.

Conclusion 

Mercedes Benz dealerships are expensive to open and operate. Mercedes Benz only selects its franchise partners after checking the dealership location and the local carpool. The dealer principals get profit and incentive on the sales and labour rates paid by the customers for paid maintenance and general repairs.

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