Milton Keynes was Steve Banner’s destination this month to catch up with Steve Bridge, the UK’s van sales and marketing director at Mercedes-Benz.
Times are tough in the light commercial vehicle business. How far do you think the sector of the market you compete in — from almost 2.8 tonnes to 7.5 tonnes — will shrink this year?
If I’m making a guess I would say by around 20 per cent. However, the level of inquiries we’re receiving at present is very strong and some dealers are telling us that it’s higher than it was this time last year; a somewhat bizarre situation given the economic downturn. The difficulty lies in pinning customers down and getting them to commit themselves. Their willingness to do so is dependent on the confidence they have in their own businesses and their ability to obtain funding. Unfortunately automotive risks aren’t as attractive to the banks as they were a couple of years ago.
As a consequence are you finding that a higher percentage of van funding is being handled by your in-house finance division?
The situation is slightly distorted so far as we’re concerned because last year we set about trying to increase our finance penetration anyway through our CharterWay operation. We were successful because it rose by around two per cent. That said, there is definitely an underlying swing towards more funding being placed through manufacturers. It’s influenced by the fact that the banks aren’t offering such good credit terms as they were previously. That makes us look very competitive.
Do you have much unsold stock in your network?
Having had three years of being under-stocked we’ve now got slightly more stock than we would like, but I don’t think we’re alone in that.
So is now a good time to visit your local Mercedes-Benz dealer if you want a new van at a keen price and you’re not too picky about specifications and colour?
Yes, it is.
How did Vito and Sprinter do last year?
We sold 7,300 of the former and just short of 19,000 of the latter. Even with the 40 per cent reduction in the market during November and December we only sold 20 fewer Sprinters in 2008 than we did in 2007. Overall 2008 was our second most successful year; 2007 was our best.
How popular are the highly-specified go-faster versions of Vito — the Sport and Sport-X — given the current economic climate?
Last year they were incredibly successful and this year we’re expanding the range with the introduction of the 95hp 109CDI Sport. It’s aimed at people who want the looks and the equipment of the Sport but may not want a 150hp engine and it’s in production now. It will be sold both as a van and as a Dualiner, with a second row of seats.
Any other changes to the model range in the pipeline?
Right-hand drive Sprinters that meet the new Euro 5 exhaust emission regulations will go into production in June. They’re being fitted with a different engine and gearbox and early tests are showing a significant reduction in fuel consumption and CO2 output. Because they meet Euro 5, they also produce less NOx (nitrogen oxide). One key change with the introduction of Euro 5 is that we won’t have a 109hp 311CDI model, which accounts for 75 per cent of our Sprinter volume; the long-wheelbase 311CDI is the most popular version. Instead we’ll have a 310CDI at just under 100hp and a 129hp 313CDI so customers will be able to go up or down. It’s worth noting that if you regulate the Euro 5 313CDI’s top speed the torque curve is far superior to that of both the 310CDI and the 31ICDI so the fuel benefit is greater. The residual value is likely to be healthy too and the new 313CDI will cost less than the current one. As a consequence we believe the new 313CDI will become the dominant model. Around 70 per cent of our Sprinter sales are to fleets compared with 30 per cent of Vito sales and chassis cabs account for around 5,000 of the Sprinters registered in the UK annually.
So far as special conversions are concerned you’ve not gone the one-stop shop route, which involves the entire vehicle being delivered to the dealer ready to go to work rather than a chassis cab being despatched and the dealer getting a body fitted locally. Why haven’t you introduced a one-stop programme?
We want to produce as many body options for availability at the point of sale in the traditional one-stop-shop way as we can. However, we want to have them fitted on the production line whenever possible rather than using local bodybuilders and putting another link in the supply chain. We’ve got plans to install tipper bodies, for example, at the factory — we’re hoping to start doing that at some point this year — although we may not be able to do the same thing with certain other types of body; Lutons for example. So far as Lutons are concerned we in fact already have a relationship with Alloy Bodies of Manchester, which builds them for us. Remember in all of this that, unlike some of our competitors, we sell our vehicles through a specialist network of commercial vehicle dealers. They’ve got plenty of experience when it comes to specifying bodies to fit every conceivable chassis and they know that one size does not necessarily fit all.
You already produce a Sprinter fridge conversion in conjunction with Kerstner. How well has that been received?
It comes with a really efficient fridge, but British operators of refrigerated vehicles tend to be a little conservative. Many of them already have a strong allegiance to established companies such as Hubbard or Carrier and we know we cannot be dictatorial in that market.
Turning to the environment, are van operators putting green issues onto the back burner as the recession bites?
The opposite is the case. As a consequence in June we’ll be launching a right-hand drive Sprinter that will run on compressed natural gas (cng) as part of a strategy to position our vans as having strong environmental credentials. In this context ECO-Start is already proving popular. (It saves on fuel and emissions by killing the engine every time it’s ticking over pointlessly in traffic. You restart the engine and move away by depressing the clutch and engaging first gear — SB).
Surely the major problem with cng vans is that while there are some big fleets that have their own cng dispensers, there are virtually none on public forecourts?
Gas compressors are available on the Continent that can be installed at home and we’re thinking of rolling the cost into the rental payments for the cng van. It’s also worth noting incidentally that we’ve got one major potential customer — a waste management company — that is looking at running the vehicle on biogas produced from waste. If it can do so then it may decide to switch its entire fleet to gas-powered Sprinters.
What’s the position with battery-powered and hybrid diesel/electric light commercials?
We’ve developed a Sprinter hybrid that’s been on test with UPS and a battery-powered derivative of Vito is under development. When Vito’s successor arrives it will be marketed with some form of hybrid/battery propulsion. (A facelifted Vito was promised for 2009 at last year’s Hanover commercial vehicle show — SB).
The Hanover show witnessed the introduction of the environmentally-friendly BlueEfficiency Vito, complete with ECO-Start and a package of aerodynamic aids. Will it be launched in the UK?
I don’t think we’ll be selling the entire package here, but some of its features will be incorporated in Vito over the next few years and we’ll be using the BlueEfficiency badge to mark out the most environmentally-friendly vans in our range.
How well is the Vito-based rival to the traditional London black cab you introduced last year selling?
We’ve sold 180 so far. Its big advantages are that it will take six passengers — ordinary black cabs will only take five — and it has got rear-wheel steering to aid manoeuvrability.
Sticking with passenger-carrying vehicles, to what extent are you looking to increase Sprinter minibus sales?
We’re introducing a new factory-built nine-seater this year. There will be different levels of specification but the entry level will be quite functional.
How many Varios do you sell in Britain annually?
We sold over 600 last year, slightly more than 10 per cent of the total production volume. It is what it is — it meets Euro 5 by the way — and it just keeps plodding on. It goes up to 7.5 tonnes, there’s nothing that really rivals it and it will be around until at least 2012, when Euro 6 comes in.
Are you still encouraging your 89 sales, service and parts van dealers to open showrooms?
Seven were opened last year, including Glen Henderson’s in Ayr. What we’re also doing, however, is asking dealers to think carefully about whether they’re still in the right location rather than just saying to themselves; “this is where I’m based, I want to build a showroom here.” Times change, but some dealers have been in the same premises for 30 years.