Once a star of America's biggest car shows, Mercedes-Benz is now abandoning them, one by one.
The German luxury maker plans to skip next year's New York auto show, after having been a central figure at the influential luxury-leaning consumer event for at least four decades. It is part of a bigger move by Mercedes — and one also being made by other brands around the world. In recent years, Mercedes also has dropped out of the premier U.S. auto shows in Detroit and Chicago. Only its presence at Los Angeles continues among the Tier 1 American events. But even that commitment could be in doubt.
A Mercedes spokesman noted last week it is too early to say whether the brand will attend the 2020 Los Angeles Auto Show.
The exit from New York could foreshadow Mercedes' rejection of the auto show business model entirely, as the company focuses on digital and retail-based ways to engage with customers. A Mercedes spokeswoman cited the automaker's desire to launch new products through nontraditional marketing methods to create brand awareness and engage shoppers.
Mark Scheinberg, New York International Auto Show president, said he hopes Mercedes' exit is temporary. "We don't know what their long-term plans are. Brands change their marketing strategies. Hopefully, next year, we'll hear back from them."
But Mercedes joins German rival BMW, which last year walked away from the New York show, despite the Big Apple being one of the biggest luxury-vehicle markets in the U.S.
A BMW spokesman said the brand's decision to leave the New York show was part of a "strategic shift to invest more in experiential events rather than static displays."
Kerrigan Advisors recently sat down with Donnie and Denny Buckalew, co-owners of Buckalew Chevrolet, the 5th highest-volume Chevrolet dealership in Houston, Texas, to discuss their perspective on the changing auto retail industry and how challenges facing single-point dealers influenced their decision to sell their dealership.
But pulling out of the New York show, which attracts more than 1 million attendees annually, is a "blow" for Mercedes' dealers, Scheinberg said.
"The response from the dealers when they heard that Mercedes is going to bypass the show was pretty strong," he said. "They thought it didn't make a lot of sense."
Seventy-two percent of attendees at the 2019 show expressed interest in buying a vehicle in the next 12 months.
Skipping New York is a mistake for Mercedes, given the large presence there of other luxury brands, such as Audi and Lexus, said one East Coast Mercedes dealer who requested not to be identified.
"When you've got the competition present at a show and you're absent, that's a black eye," the dealer said.
Sam Fiorani, vice president with AutoForecast Solutions, said that decisions to leave car shows are shortsighted since the shows are one of the few places for aspirational buyers to experience vehicles they were not necessarily aware of.
"Where else can you get that kind of direct experience with potential customers?" Fiorani said.
Doing the math
As consumer shopping habits evolve and auto retailing goes digital, some automakers are looking beyond auto shows to connect to potential buyers.
The 2019 North American International Auto Show was missing the three big German luxury brands — Mercedes, BMW and Audi. Meanwhile, Volvo and Ford skipped this year's Geneva auto show.
Auto shows are a great way to reach consumers but no longer the only way, said Stephanie Brinley, principal automotive analyst at IHS Markit. "Automakers can be more strategic in their choices, rather than filling space because it has always been so."
Brands are doing the math on the multimillion-dollar cost of flashy show-floor exhibits, press conferences and VIP events. Some are questioning whether it's really worth it.
"At the end of the day, you go, 'OK, where's the ROI?' " said Greg Barnes, president of Bill Ussery Motors Group in Coral Gables, Fla., which operates two South Florida Mercedes stores.
Beyond the auto show
Automakers are also diverting some of their auto show budgets to local events that let prospective customers drive their newest vehicles, rather than ogle them on a stand. BMW has hosted its "Ultimate Driving Experience" roadshow in 16 U.S. cities. The events allow consumers to speak with product specialists and drive the latest models on a variety of courses.
Meanwhile, Mercedes is operating temporary pop-up stores in luxury malls as it experiments with brand environments focused less on pushing metal and more on engaging consumers. The pop-ups have drawn 250,000 visitors and generated 3,000 vehicle sales at local dealerships, Mercedes said.
