The factory-owned sites, part of the recently renamed Mercedes-Benz Retail Group, are in metropolitan locations and a select band of franchised partners were reinstated to run the remaining outlets in “Market Area Concepts”. In sales terms the prestige brand has since been outstripped by its arch rivals BMW and Audi and there are those in the industry who believe the two events are not unrelated. In the UK BMW and Audi have both stressed they have no intention of following a similar path – insisting they have expertise in making cars while dealers, especially those with a wealth of local knowledge and goodwill, are better at selling them. But Mercedes is not alone in going down the wholly-owned road. French mass market makes Citroen, Peugeot (Robins and Day) and Renault all operate their own British sales outlets while Ford's Retail Group is the tenth biggest group in the Motor Trader Top 200. The disadvantages of taking car sales in-house is that it requires a heavy investment in capital, property, stock and staff, all of which become fixed overheads. If a recession hits and sales fall off a cliff, then manufacturers are lumbered with having to pay for these items along with all their traditional costs, rather than commiserating with dealer groups faced with sticky sales and showrooms full of hard-to-sell cars. The upside for vehicle makers is that they cut out the middle man, and can directly extract what profit there is to be had from selling new cars, tap into the relatively lucrative used sales and servicing sector, and have a direct sales line to buyers of hard and replacement parts. According to car industry analyst Peter Schmidt of consultants AID, this makes particular sense for the likes of Citroen, which does not have a prestige name, and whose products are bought pragmatically on price, discount and the deal on offer and what they do, rather than who makes them. Although less wedded to the “pile ‘em high, sell ‘em cheap” philosophy which in the past helped the firm shift vast quantities of AX and Saxo superminis, the French carmaker does not trade on the allure of its name, as Mercedes or BMW does, so direct sales will help it generate hard fought for profit as soon as a car is sold. Schmidt thinks Mercedes' decision to chase similar profit streams shows just how tough the new car market is. “They decided to do something they've done successfully in the domestic, German market,” said Schmidt, adding that BMW and Audi also operate wholly-owned, home-market showrooms, something they haven't pursued here, although they exert massive control of the look of British showrooms and how they are run. Schmidt qualifies his remark about the success of Mercedes' German showrooms, which he said increased the profit levels on the cars sold, but had not won them friends among the buying public. “The customers got a better service under the old system. Traditional dealers worked more to look after them. Guys employed by wholly-owned dealerships looked to their employers, the car makers. That's where their loyalty lay.” Dr Peter Cooke, the University of Buckingham's professor of automotive management, said that there was often a culture clash when carmakers tried selling their own vehicles. “Training is very disciplined in car companies. Your task is to turn out vehicles. In sales it's the exact opposite. You're there to dance attendance on the prospect, put together a total package. It requires much more flexibility,” he said. Despite a plethora of market research, he suggested that car makers aren't always au fait with regional market trends. “In Britain I think there are 12-14 sub-markets, to understand them locally is very difficult.” This makes a top down imposition of ideas and strategies potentially inappropriate on a regional level. He also suggested car makers have a mindset which equated volume with success, and that people with practical sales experience looked for added value. Professor Cooke said that Porsche had seen some success with its wholly-owned UK sites, because sales staff hadn't been kept under the thumb. However, Schmidt is not convinced that wholly-owned dealers have hampered Mercedes' UK sales, and suggested that the company has a world-wide image problem after its reputation for impregnable quality was tarnished by a series of reliability glitches, particularly with electronics, and complaints of a falloff in build quality and materials. He believes wholly-owned dealerships are here to stay, and will probably become an increased presence, as carmakers battle to extract profit. “They really have no alternative,” he said.