Orange County long has been Mercedes-Benz country.
Swanky Fletcher Jones Motorcars in Newport Beach is the nation’s top Mercedes dealer. Right behind Fletcher is Mercedes-Benz of Laguna Niguel.
Then there’s House of Imports in Buena Park, Mercedes’ No. 4 dealership nationwide. And Caliber Motors in Anaheim Hills is the fastest growing dealer for the German automaker.
Chalk it up to OC’s wealth and love of luxury.
But now Mercedes has some close competition here,and from a familiar face, at that. In the past few years, German rival BMW has been eroding Mercedes’ long-held lead in the county.
BMW’s No. 1 North American dealer is here, Crevier BMW of Santa Ana.
BMW could surpass Mercedes here if the current trend sticks. Last year, sales of BMWs by all dealers in OC grew 20% to 8,619 vehicles. That still trailed the 9,944 Mercedes sold here last year.
But the growth nod goes to BMW: Mercedes sales were up 3.5% last year and 2.2% the year before.
The stakes are high. Fletcher, Mercedes-Benz of Laguna Niguel and House of Imports are the county’s largest dealerships by revenue, doing about $1 billion a year in combined sales, according to the Business Journal’s annual list.
Crevier BMW is No. 4 with about $250 million in yearly sales. Irvine BMW, the next largest BMW seller here, does about $225 million a year. Buena Park’s Shelly BMW, part of Irvine-based Shelly Automotive Group along with Irvine BMW, does $130 million.
Then there’s the Lexus factor. Toyota Motor Corp.’s luxury brand is gaining ground here, too. David Wilson, owner of the county’s top Lexus dealership in Tustin, plans to start building a second, $60 million dealership near Fletcher Jones in Newport Beach next year.
All this makes OC the ultimate battleground for luxury automakers. Will Mercedes hold its lead as DaimlerChrysler AG works through problems at its flagship brand? Will BMW take the lead as dealers ramp up in OC? Will Lexus pull a fast one and zip ahead of the bunch?
It could be that OC is catching up with the rest of the country. In the late 1990s, Mercedes was the top luxury car in the U.S. Now it ranks a vulnerable fourth.
This is the only part of the country where BMW doesn’t outsell Mercedes, according to Herbie Weston, a sales manager for Crevier BMW.
Mercedes Still Strong Here
But don’t count Mercedes out. Sales here continue to grow, even as they dropped by 0.7% nationally last year. Fletcher Jones had a record 2004, selling 8,017 vehicles worth $533 million in sales.
(Fletcher’s total includes 2,200 used-car sales. The dealership sells as many new and used cars as it can to boost volume and assure sizable allotments of new cars from Mercedes.)
By comparison, Crevier sold 5,500 new and used cars last year.
Mercedes has the running advantage in OC largely because of Fletcher Jones, said Eric Noble, president of Orange-based The CarLab Inc., which works with luxury automakers to develop vehicles.
“Fletcher Jones has Saturday morning car washes, which are jam packed,” he said.
The car wash isn’t really about getting your car washed, Noble said.
“It’s a social event,” he said. “If you’re a gold digger and you’re looking for a vascular surgeon, you buy a C-230 and go to the car wash. They’re not going to go to Crevier to do that.”
Crevier, one of several dealers in the Santa Ana Auto Mall, doesn’t have the same location edge as Fletcher, Noble said.
In fact, no one does, until Wilson’s Lexus dealership opens.
For now, Fletcher has Newport’s Back Bay to itself, nestled between moneyed coastal enclaves and the business hub of Irvine.
Location has helped Fletcher, said Geno Effler, spokesman for Mercedes’ Western region office in Costa Mesa. But what’s put Fletcher on top, he said, is customer loyalty.
Fletcher has mastered the nuance of pampered customer service, Effler said.
“It’s the little things,” he said.
Fletcher was first to offer free car washes. Now nearly all of the luxury dealers do. Fletcher customers also can expect to drop off their car for service and be given rides to the airport.
“People dig on that,” Effler said.
But things aren’t going so well for Mercedes the automaker. The unit is struggling to fix problems, from car noise to broken moldings. The effort has decimated profits and dragged down parent DaimlerChrysler.
Despite the automaker’s woes, OC Mercedes dealers can expect the support they need, according to Effler.
“OC is an extremely important market to Mercedes-Benz,” he said.
Crevier Expansion
Crevier BMW is looking to strike while the competitive iron is hot. The dealership is quadrupling its operation to 200,000 square feet in a bid to keep growing sales.
Chris Collins, general manager at Crevier BMW, chalks up his dealership’s gains to BMW’s consistent quality.
“It’s performance,” he said, “the way you feel when you drive it.”
Crevier is looking to add more luxury touches. It’s already put in plasma TVs, wireless Internet access and a Diedrich Coffee shop.
“We’ve always talked about the dealership,” said Jim Hughes, managing director of TH & M/RB, part of Irvine’s RiechesBaird Advertising and Crevier’s ad agency since its start on First Street and Broadway in Santa Ana.
Nobody knew about BMWs back then, according to Hughes. So Crevier sought to be the “enthusiasts’ BMW store.” That hasn’t changed, he said.
In a series of new Crevier ads, two BMWs sit next to each other on the dealership floor, talking: “Well it looks like we’re out of here,” one says. “I’m really going to miss it,” the other says.
“We’re not the least bit concerned about those guys,” Hughes said of Mercedes. “We’re just heads down, pushing ahead.”
BMW and Mercedes both do well in terms of appeal, said Chance Parker, executive director of J.D. Power and Associates in Westlake Village.
Mercedes has tried to become more stylish and innovative, he said, which has brought technical glitches.
“Mercedes’ biggest red flag is in our durability study,” he said.
BMW has had its share of problems, he said, including with its iDrive, a computer system that regulates air temperature and lights, among other things. But overall, BMW has had fewer quality issues, Parker said.
Lexus: Quality Edge
“Frankly, they both need to catch up to Lexus, which has set the benchmark,” Parker said.
In the words of CarLab’s Noble: “The one thing you can say for the Japanese makers is they may not deliver the most exciting product, but they rarely fumble.”
Lexus has another edge over Mercedes and BMW, according to Noble. As a newer brand, Lexus is able to handpick dealers and write contracts that benefit the automaker, he said.
All automakers have dealer standards, he said, “But Lexus has a much bigger stick.”
Noble said his money is on Lexus to dominate the OC market in a few years.
