Mercedes-Benz USA is reversing part of its 2022 restructuring plan due to dealer dissatisfaction and declining sales.
The company plans to transition back to a region-based dealer support model starting in April 2025 after previously adopting a centralized throughput-based model that focused operations at its Atlanta headquarters.
In the 2022 reorganization, Mercedes divided its 384 U.S. dealerships into three groups- Air, Land, and Sea. The “Air” group included publicly traded dealership groups representing about 25% of U.S. sales, while “Land” comprised regional multipoint retailers generating around 40%. The “Sea” group was made up of single-point dealers. Sales, service, and aftermarket teams were assigned to these groups, tasked with responsibilities across the U.S.
CEO Dimitris Psillakis described the shift as a way to align corporate support with dealer groups’ varying needs and move away from a “one-size-fits-all” approach. However, dealers reacted negatively to the reorganization, contributing to Mercedes’ decline to third place in the U.S. luxury market, overtaken by BMW and Lexus by 2023.
Many dealers expressed frustration with the centralized structure, particularly the lack of regional support from local brand representatives. Dealers in unique market conditions found it challenging to rely on distant headquarters. For example, a dealer from Southern California noted that market conditions in their area greatly differed from those in regions like Utah or Arizona.
To address these concerns, Mercedes will reorganize U.S. markets into three regions: West, Northeast, and Southeast. Sales and after-sales managers will collaborate more closely with dealers specific to their markets. This change will take effect in April 2025. Mercedes is also recruiting nearly three dozen additional staff to improve parts delivery and field-based technical support.
Frank Diertl, Mercedes-Benz USA’s retail network development leader, described the 2022 restructuring as a “bold move” but emphasized that valuable lessons were learned. The revised structure incorporates geographical elements to better meet dealers’ needs.
Moreover, Mercedes will maintain some aspects of the previous plan, including a dealer support call center, a parts logistics team, and a tactical dealer development group to support underperforming dealers. The company will also continue its monthly strategy and technology updates with larger dealership groups.
Mercedes-Benz Dealer Board Chairman Joseph Agresta Jr. described the change as an “evolution,” allowing dealers to better understand local consumer behavior and capitalize on opportunities.
Although the 2022 restructuring plan received mixed reactions, particularly from smaller operators who found centralized support inadequate, many reported reduced visits from brand representatives. This made it harder to address issues and gather insights on local market trends.
By reverting to a region-based model, the automaker aims to restore local market intelligence, which allows dealerships to tailor their inventory to local consumer preferences.
