By on February 21, 2017

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If Mercedes-Benz dealers manage to overhaul their stores to the brand’s updated “Autohaus2” image standards, the locations can forget about additional modifications until after 2024.

The German automaker’s promise to leave dealerships alone is abnormal, and comes after the second generation of its controversial Autohaus standard established — to the chagrin of dealerships — in 2008. Much of Mercedes’ salesforce objected to the mandatory image alterations, similarly to how Cadillac’s dealer network has responded to that brand’s Project Pinnacle.

Hoping to ease tensions as showrooms adhere to the new status quo, the 2024 pledge provides all sides with a reprieve. The Autohaus2 plan, and subsequent dealer amnesty, was penned under former Mercedes-Benz USA CEO Steve Cannon, though the company’s current North American boss, Dietmar Exler, also supports it. 

“It was the right thing to do,” Exler told Automotive News. “There is no backtracking from that. We’ve made a commitment to the dealers.”

According to Mercedes spokeswoman Donna Boland, the more youth-focused branding and image modernization is fine with a 10-year buffer. However, the majority of Benz dealerships have yet to update to Autohaus’ second incarnation. Stores were required to submit their renovation plans or meet with a company designer prior to last November, but work doesn’t have to be completed until June 30, 2018.

While Mercedes was obliged to follow some new franchise laws that disallows incessant image updates, not every state is subject to the same laws and it could have shortened the 2024 timeline for those stores. However there are over a dozen U.S. states states that have passed seven, ten, or even fifteen year limits on frequently manufacturers can require showroom overhauls.

Dealers seem generally pleased with Mercedes’ mandatory benevolence, however it came to be. “Mercedes hit the sweet spot,” said Jeff Aiosa, a Benz dealer in New London, Connecticut. “Ten years is a good number for the state statutes across the country.”

I just hope the Autohaus2 look remains contemporary a decade later. A lot can change in a year in terms of what’s hip and you don’t want a showroom filled with the automotive or architectural equivalent of mullets and flared jeans.

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14 Comments on “Looks Aren’t Important: Mercedes-Benz Dealers Get a 10-year Break from Image Maintenance...”

  • avatar
    Corey Lewis

    *Adjusts Bugle Boy black and neon green fanny pack.*

    Hey, some looks are just timeless. No update needed.

  • avatar

    What I can’t figure out is why somebody considering opening a dealership doesn’t negotiate all this stuff into the franchise agreement? Things like required updates, territories, etc.

    What makes car dealers so special that they need the protections written into state laws? I mean, it’s not like there are similar protections for fast food joints.

    • 0 avatar

      Because automotive franchise dealership agreements are essentially “adhesion contracts” of the same model as McDonald’s or Cold Stone Creamery more (if you want to read a take of franchisee woe, read up on the Cold Stone Creamery franchisee litigation against the franchisor).

      The new franchise agreements are, for all practical purposes, carved in granite, with everything from the type of lighting in the showroom to the geographic territory set out in advance.

      It’s not a “take and mark up & get changes back to us” type of agreement.

      • 0 avatar
        Glenn Mercer

        As someone who has read many many of these dealer/OEM agreements, I concur 100% with DeadWeight: dealers don’t generally get to edit or amend these, it is “take it or leave it.” Maybe (I am speculating here) a very large public chain like Asbury might negotiate something, but other than that, you don’t get to negotiate anything. This is part of the reasoning behind the dealer argument for the state laws in general: there is an inherent power imbalance between the large OEM and the small dealer. The OEM can say “take it or leave it” (and a would-be dealer who walks away will be replaced by one who doesn’t), but a dealer cannot easily say the same to the OEM. (One can argue whether the protections are needed or not, and to what degree, but I am not making that point, I am only highlighting the reasoning that is behind the dealers’ position.) Where I HAVE seen small adjustments is in the territory limits: there is room for the presentation of data that can demonstrate that Highway X no longer carries the same amount of traffic as when the OEM last surveyed the area, for example, etc. These adjustments are in addenda to the contracts.

        • 0 avatar

          I did a McD’s francihise for a former employer a few years back, and read the entire franchise agreement. They own your machines, you can’t buy from anyone else, and the terms aren’t nice. The rep from Corporate smiled at this at the time puppy lawyer, and said…”and if it wasn’t McDonald’s, you’d tell them they would be crazy to sign it”…my experience with McD corporate was good, they were professional, and were smart enough to hire local counsel to get the operation approved…..

      • 0 avatar

        So? You need big bucks to open a car dealership. If the terms of the contract are unacceptable, take your investment money and do something else with it. We aren’t talking some minor consumer transaction like buying a plane ticket, where you might not have any options.

        Again, no other business receives this kind of attention or protection, why should car dealerships be so special?

        • 0 avatar
          Glenn Mercer

          Fair point, and many investors DO walk. But there is a secondary point here: we are talking about when the OEM changes the specs on the building AFTER the dealer has signed the contract, typically years earlier, as DeadWeight mentioned. So I put my $10 mm in to buy the store (eyes wide open), and now I am told to put in another $10 mm, to remodel it. You might say at that point, well, the dealer should walk away, and not do the investment. But the trouble is these buildings tend to be single-use and even single-brand properties: if I don’t want to pay for the BMW upgrade, when I sell the store its value is diminished because a) any buyer of it will have to make the BMW upgrade investment also and b) I can’t convert the store to another brand without tearing it up first: Honda will not tolerate a BMW “look” in its stores. (The service bays are of course reusable.) Different from say an Acme clothing store, where I can swap the posters fixtures and mannequins and re-open as a Apex clothing store. Even hotels are different: how many times have you seen a Fairfield later re-open as a Courtyard, etc.? Look how many Pizza Huts have been repurposed for other uses. So there is a bit of a lock-in effect here, where dealers feel they are over a barrel. Again, you may disagree on the need for laws to protect the dealers, but I am trying to point out that it is not so easy for them to just “walk” if they don’t like the OEM’s change of architecture.

  • avatar

    Decorations don’t matter, it’s the service and the people you deal with that matter. Maybe a nice cup of coffee too.

  • avatar

    Funny, most FCA Chrysler-Dodge dealers seem to have gotten a 20 year break on image maintenance, judging by their appearance.

    • 0 avatar

      Many dealerships were “compliant” according to the franchise agreement when new, but became outdated with the passage of time, which is what this entire effort by Mercedes is attempting to address.

      Many dealerships making money either because they stock product that’s in demand and/or are one if the few exclusive sellers of said product in a wide geographic area are nit going to voluntarily sink a ton of $$$ in a dealership renovation without being severely pressured to do so (which is why you see all manner of antiquated dealerships selling nearly vehicles of every type and at almost any price point).

  • avatar

    In this category of vehicle…is the store ambience a big deal with customers?

    My view is I DGAF about what it looks like, much more concentrating on the deal. But I know I’m an outlier.

    • 0 avatar
      Glenn Mercer

      I would say that, as with so many other things, customer opinions vary. If I am looking for a rock-bottom price on a new car, I want a nice run-down store, as then I know the dealer didn’t spend a lot of dough on the store, and now has to earn it back from me. Conversely, if I am about to drop $75,000 on a luxury sedan, maybe I want a posh store as reassurance, as some sort of evidence that I have joined the ranks of the 1% or whatever (since let’s face it, there is little the $75,000 new car does that a $5,000 beater doesn’t). Or if I am a high-paid surgeon (e.g.) I might not want to even see the store at all, as I value my time at $1,000 an hour, and want the car just dropped off at my home. There is also a competitive issue: some customers, if they see that BMW has a palatial store, and that Audi does, will wonder if something is wrong if Mercedes does not, also.

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