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It is choice time for Good dealerships

It is choice time for Good dealerships

After 9 years within the U.S. market, the Good model’s inroads right here have been small. And with a transfer later this yr to electrical automobiles solely, the prospects of Daimler AG’s microcar model are about to shrink much more.
The technique shift is sufficient to have many Good sellers rethinking whether or not they’ll proceed to promote the quirky ForTwo two-seater.
“Electrical Good automobiles make sense in sure markets, however do not make as a lot sense in different markets,” mentioned Ken Schnitzer, chairman of the Mercedes-Benz Supplier Board and proprietor of two Good retailers in Texas. “So it’d make some sense for some sellers to develop into service-only sellers.”
It is a choice Schnitzer himself is weighing. His two Good areas are in Dallas and Fort Value, and he notes that EVs typically will not be huge sellers in Texas. “Drive occasions and vary could make a giant distinction — it isn’t like being in downtown San Francisco,” Schnitzer mentioned.

“It may not make sense for among the sellers, relying on the place they’re within the nation, to proceed,” Mercedes-Benz USA CEO Dietmar Exler instructed Automotive Information. “That is one thing we’re discussing with our sellers. However for electric-important markets, I’ve not had one dialog with a seller who wouldn’t wish to proceed.”
Exler introduced in February that the model would shift completely to EVs within the U.S. and Canada this yr. It’s promoting down gasoline-powered stock now, and a redesigned electrical ForTwo coupe and convertible will go on sale this summer season.
One problem: The electrical ForTwo coupe will begin at $24,550, together with transport, vs. a base worth of $15,400, together with transport, for the outgoing gasoline coupe. Good tried to mitigate the upper worth by trimming $1,200 off the value of the redesigned electrical coupe in contrast with the earlier technology. The sticker on the Good is lower than on the bigger Nissan Leaf five-seater, which begins at $31,545 and has extra vary. However the Leaf additionally carries excessive incentives, a whopping $16,296 common low cost up to now this yr, in keeping with Autodata Corp. Against this, Good’s common low cost for a similar interval is $four,357.

Curler coaster
For Good, it has been a curler coaster nine-year stretch within the U.S.
Gross sales received off to rollicking begin in 2008 with 24,622 Good ForTwos bought.
Gasoline costs spiked to greater than $four a gallon, and automobile buyers in a Kelley Blue Guide examine that yr ranked gas effectivity as an important issue of their car choice. (It is now slipped to No. 7.)
Executives for Penske Automotive Group, which launched Good as an unbiased distributor, mentioned demand was sturdy sufficient to promote 40,000 Smarts that yr if stock had been out there.
However by the tip of 2008, gasoline costs had plunged, and auto gross sales had been crashing because the U.S. spiraled into the Nice Recession. Regardless of beginning the yr with 40,000 individuals who’d put $99 deposits on the automobile, Good’s U.S. gross sales dropped to 14,595 in 2009.
The model started providing incentives on the automobiles by the center of that yr.

Drive Evaluations

Gallery: Good Fortwo Electrical Drive inside

Good’s U.S. gross sales numbers in subsequent years have by no means come near approaching the degrees reached in both of its first two years right here. By 2016, gross sales had tumbled to six,211. They’re down 20 p.c via the primary 5 months of this yr.
“Good had a polarizing model — it was a distinct segment product, and it attracted a sure buyer,” mentioned Tony Pordon, Penske Automotive Group govt vp of investor relations and company growth. “They needed to develop up with the model. We did a number of good issues to carry the product to market, however it wanted one other automobile. It wanted extra fashions.”
Bigger fashions, similar to a four-door Good, had been pursued, and Penske even struck a take care of Nissan to promote a five-seat subcompact underneath the Good title within the U.S. starting in 2011.

Again to Mercedes
Good started within the early 1990s as a three way partnership between Daimler and Swiss watchmaker Swatch/SMH. After Penske made the Nissan deal, Daimler requested for the U.S. distribution rights again, saying it believed it might increase Good’s gross sales, which might assist it meet new company common gas economic system requirements on the horizon.
In July 2011, management shifted again to Daimler, Good USA was put underneath the umbrella of Mercedes-Benz USA and the Nissan automobile was scrapped. Good sellers with out an current Mercedes-Benz operation, 21 in all, misplaced the franchise as Mercedes-Benz USA moved to have solely current Mercedes sellers promote Good.
Although funding calls for for sellers decreased — largely as a result of they might function Good out of a nook of their Mercedes-Benz retailer — sellers and the model have continued to battle. Even when the primary electrical Good ForTwo was launched within the U.S. in 2013, gross sales did not profit a lot. After a small bump in 2014 — the model’s peak EV yr with about 2,600 bought — Good gross sales plummeted once more as shoppers shifted more and more to SUVs and crossovers.
Now with just one nameplate and a distinct segment powertrain, gross sales appear positive to maintain dropping.
Exler predicts among the gasoline-model demand will transfer over to Good EVs, enabling the model to push its total gross sales increased than the height EV mark in 2014.
“We’re hoping they may come up fairly a bit from that time,” Exler mentioned. “How excessive they go, we should see.”
He acknowledged it “could be a bit of bit longer” to catch again as much as recent-year ranges for total gross sales.

Extra EV competitors
IHS Automotive does not foresee the technique offering a raise for Good. By 2020, the trade tracker is forecasting U.S. Good gross sales of simply 1,500 models.
“They’re positively going to take a notable hit, however it’s a part of bigger technique and a choice to go a bit totally different with it,” IHS analyst Stephanie Brinley mentioned. “Mercedes has been devoted to protecting Good in the USA for a decade. They have not lit the world on fireplace with this automobile but.” The general EV market will broaden and develop, although. IHS predicts it would make up about 310,000 automobiles in 2020, up from roughly 70,000 final yr. A number of manufacturers, together with Mercedes, have rolled out plans for a number of new EVs.​
The gross sales declines and weak forecast for Good within the U.S. begs the query: Why hold it right here in any respect?
Daimler’s choice appears to be a long-term play to assist its company common gas economic system numbers, plus lay extra of the groundwork for its electric-vehicle technique, Brinley mentioned.
Annette Winkler, Good’s international boss, mentioned she needed to focus the model on condition that the microcar section within the U.S. is so small. “Good can develop — it could develop within the Good cities we’re specializing in,” she mentioned.
These locations embody San Francisco, New York, Los Angeles, Miami and Portland, Ore. Sellers in markets similar to these — extraordinarily dense city settings with tight parking and even a propensity towards car-sharing fleets — are anticipated to stay with the model, Winkler and Exler indicated.

Inexperienced Vehicles

Gallery: Good fortwo electrical drive coupe

Goodwill gesture
Others additionally might keep as a result of it will not value them a lot, and it’ll function a goodwill gesture towards the manufacturing facility.
That was the preliminary pondering of the leaders at Germain Motor Group in Columbus, Ohio. They got here away from the February announcement planning to stay with Good gross sales though low gas costs and waning demand for small automobiles make it robust timing for the electric-microcar section now. That strategy partially was aimed toward supporting the retailer’s relationship with Mercedes-Benz.
However Germain COO John Malishenko mentioned the corporate is now rethinking whether or not to hold on to Good. The potential shift was prompted partially by the supply by Mercedes-Benz USA to let sellers proceed to service Good automobiles for 4 years even when they selected to now not promote the model, he mentioned. “We’re nonetheless discussing it and haven’t made a definitive choice to remain or go at this level,” Malishenko wrote in an electronic mail. The impression given by Germain’s contacts at Mercedes is “that we would not be seen as unsupportive if we determined to cease promoting Good.”
Even the retailer that introduced the model to the U.S. is rethinking it. Penske govt Pordon mentioned the retailer is evaluating its six U.S. Good areas — fewer than it operated when it ran the distributorship — and sure will give you a hybrid resolution the place it retains promoting at some and goes to service-only at others.
“I simply do not know what the quantity can be,” Pordon mentioned.
Until Good can enter some new segments — carry out a four-door subcompact, even a mini crossover — and dramatically enhance its electrical vary from as much as 80 miles in the present day, the model will very a lot stay a metropolis automobile viable just for pretty particular city markets, mentioned Akshay Anand, a Kelley Blue Guide analyst. Whereas extra electrical rivals ought to assist create curiosity and raise total EV gross sales, Good might undergo compared on dimension and vary.
Mentioned Anand: “With solely the ForTwo, it is only a actually robust promote.”
Jamie LaReau and Richard Johnson contributed to this report.​
“Good sellers have a choice to make” initially appeared in Automotive Information on 6/19/17

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