MERCEDES-BENZ has completed the selection process for its new UK dealer network and is in the process of signing franchise agreements.

The new distribution network will have 35 market areas and come fully into force by the middle of 2003 as existing franchise arrangements expire.

Making such radical changes appears a huge risk in the light of a record 2001 for Mercedes-Benz that saw it sell 80,500 cars (including Smart) in the UK.

But Joachim Eberhardt, managing director of DaimlerChrysler UK, argues that it would be a bigger gamble 'to wait for the market and our customers to force change on us'.

Speaking in Detroit, he said the challenge is for official franchised networks to deliver the perceived value and convenience delivered by other distribution channels such as the internet, overcoming outmoded retail concepts such as Monday to Friday, 9–5 opening hours.

While customer satisfaction indices provide numerical evidence of dealer performance - and Mercedes-Benz measures CSI on every vehicle sale and service - Eberhardt singles out repeat business from customers as the best indication of winning service standards.

To secure repeat maintenance business, the new dealer network will introduce the practice of customers driving their cars into the workshop to explain any faults to a technician. Eberhardt described the current standard industry practice of customers parking outside and explaining the required work to a service receptionist as like 'going to a doctor but leaving your body at home'.

PAG boss gives prestige fleet business warning

THE global head of Ford's Premier Automotive Group has warned of the dangers of fleet business for prestige carmakers.

Speaking exclusively to Fleet News, Wolfgang Reitzle said fleet business and in particular daily rental could destroy the value of premium brands.

'Premium brands should avoid self-drive hire and only do it in a very limited way such as VIP rental at airports, where it may have a test-drive effect. But I do not like to use fleet business for premium brands because you run the risk of diluting the brand and weakening your residual values,' he said.

With responsibility for Volvo, Jaguar, Land Rover, Lincoln and Aston Martin, Reitzle insisted that prestige marques had to take a firm line when selling into the corporate sector.

'We want to enter company fleets, but it's very often today a tough market price-wise and we do not want to give too many high rebates,' he said.

'But when you really stick to your positioning in pricing and residual values in the premium sector then you cannot do too much fleet volume. However, it's always tempting to do fleet business, but when the market goes down you are in trouble if you rely on it.'

Huge interest for MINI in United States

THE 'Italian Job' MINI Cooper S, a German icon of Britishness, makes its debut in the United States later this year.

At the launch of the Cooper S and Cooper in Detroit, MINI revealed that it has already sold 25,000 MINIs internationally.

Torsten Muller-Otvos, worldwide director brand and product manager MINI, said: 'We are well on track to reach our 2002 sales target of about 100,000 units worldwide.'

In the US, 50,000 potential customers have registered on the MINI website, despite the fact that the brand has not been on sale in the country since 1967. MINI has used the internet exclusively to position the brand during the pre-launch for the first time in the car industry.

Mazda RX8 production confirmed

MAZDA has confirmed production of a new RX8 rotary-engined sports car. The 250bhp vehicle is due to go on sale in 2003, offering seats for four adults in a novel design arrangement.

The car is in effect a four-door model, but the rear doors hinge at the back, rather than the front, to create a wide opening for easy access and avoiding the need for a central B-pillar.

Meanwhile, Mazda Europe has a new president, Steve Odell, formerly chief operating officer of Mazda North America, who is keen to exploit fleet synergies with sister-company Ford.

Toyota boosts clean-fuel testing

TOYOTA is stepping up trials of clean-fuel vehicles with its latest hydrogen fuel cell hybrid with on-road trials in the US and Japan.

The FCVH-4 is based on the Highlander SUV and generates its own on-board electricity with compressed hydrogen.

Seven vehicles are now undergoing tests, but Toyota says other fuel sources including natural gas and methanol should not be dismissed.

Nirohiko Nakamura, engineer responsible for Toyota's fuel cell development, said: 'It's not a matter of one fuel winning and the other losing. It's a matter of coexistence.'

It is thought fuel cell vehicles will not be ready for mass production for about 10 years, and although the FCVH-4 has a top speed of 95mph, its cruising range is only 155 miles.

June debut for Cooper S

THE high-performance MINI Cooper S will go on sale in June priced at £14,500 on-the-road.

The 163bhp hot-hatch will use a supercharged 1.6-litre engine with 155lb-ft of torque, and combined fuel consumption will be 33.6mpg. It accelerates from 0–60mph in 6.9 seconds.

It will have sports suspension, a six-speed manual gearbox, run-flat tyres and automatic stability control plus traction control as standard. Carbon dioxide emissions will be announced nearer its launch.

As with the MINI One and MINI Cooper, the Cooper S comes with the five-year servicing package for £100 covering parts and labour. MINI has received 1,700 advance orders for the Cooper S.

GM's mission to excite car buyers

'INNOVATION, quality, innovation, quality' — the mantra echoes loud among the senior executives at the world's largest carmaker General Motors.

But it takes time for such messages to filter through to a brand's public perception, and in Europe Vauxhall and Opel accept they have more work to do in emphasising this quality issue and reinforcing it with product innovation.

Carl Peter Forster, chairman and managing director of Opel, said: 'We have made tremendous measurable progress in reliability. Our actual performance has improved but it takes time for this to travel through to our reputation.'

The first new product to underscore this quality message will be the new Vectra, which Forster said represents a 'massive jump' ahead of the current model.

GM Europe is currently stripping out costs as part of Project Olympia, but promises no budget cuts in product development or economising of build quality.

Rick Wagoner, GM president and chief executive officer, said: 'We have to build our brands to a higher level of respect.

'If we build products that excite the customer then we can achieve the sales we want. The Zafira, for example, is selling more than we thought and attracting younger buyers.'

The Zafira, with its ingenious seven-seat design, was repeatedly singled out by GM chiefs as an example of how innovation succeeds.

The mini-MPV will be followed by the concept Vauxhall/Opel Signum car (an upper-medium/executive-sized model with fold-away rear seats). GM claims the Signum will become the first production model to offer flexible seating without being an MPV.

Managing residual values is key to return to profit

RESIDUAL values are playing an key role in Project Olympia, General Motors Europe's far-reaching plan to return to financial profitability.

Residual value improvement will help the firm meet the Olympia goals of increasing revenues and reducing costs.

Mike Burns, president of GM Europe, said the manufacturer had to improve its profitability and brand image through stronger management of its residual values.

He insisted that Vauxhall, Opel and Saab would carefully monitor the volumes of their sales into the daily rental sector, and manage the specification of these vehicles to ensure they have appeal to a used car audience.

Burns also said the GM brands would examine alternative remarketing channels so that management cars, for example, could be recycled as rental cars, or rental cars recycled as lease vehicles.

He said: 'At times we have not been as disciplined as we need to be to remarket cars. We have probably not paid as much attention on the residual value side of the business, and it's the same with Saab, so there is work to be done.

'There is now a group of people working on this, and we have taken the best people from marketing and GMAC to come up with new ideas.'

Entry-level Jag set to be a best-seller

Business motorists will soon be helping turn Jaguar's new entry-level X-type model into a best-seller.

Due in the showrooms in the spring, the 2.0-litre car has the potential to account for a third of all X-type registrations in Britain by summer, believes company managing director Mike Beasley.

'We think it will earn us an extra 30,000 sales in the fleet sector and I'll be very disappointed if it fails to drive us to another volume record by the end of the year,' he said.

Speaking as the company revealed annual output had exceeded 100,000 for the first time, Beasley told Fleet News: 'It has been our ambition to make Jaguar motoring more affordable and this version of the X-type represents our best chance for further growth.

'Although we never intend to be in the position of attracting volume orders — that's the job of Ford — we are confident that a £19,995 price will introduce our brand to a good many more fleets.

'Of course, we expect some people to think that a smaller engine can't possibly deliver the kind of performance that has always set Jaguar apart, but the sceptics are in for a big surprise.

'This car is so good that when I tried a prototype I was convinced I'd been given a 2.5 version by mistake.'

Beasley claimed the 2.0-litre's combination of price, economy, performance and 219g/km CO2 emissions figure would prove to be an effective weapon in Jaguar's challenge to loosen the grip of Mercedes-Benz and BMW on the UK executive car market.

'Launching this car alongside the £24,995 lead-in model in our revised S-type range this spring should help us stand our ground against rivals until we can complete the challenge with a turbodiesel.

'That remains more than two years away, which is an unfortunate delay but the fact is that no engine is yet available that we would be prepared to use.

'For that reason, we're having to wait for next-generation common rail technology.'

New Volvo SUV set to boost UK sales

Volvo's first SUV model is expected to boost sales of the Swedish company's cars by 3,000 units per year in Britain.

Available from September, the UK-specification XC90 will carry seven adults and is likely to cost from £28,000, officials said when the high-riding model made its debut at the show.

'This will be a strong challenger to the BMW X5 and Mercedes-Benz M-class. It's also the safest premium SUV around. We expect it to add a strong new dimension to our corporate business,' said a Volvo Car UK spokesman.

With a choice of a 272bhp 2.9-litre, six cylinder petrol engine or 163bhp five cylinder turbodiesel, the XC90 is poised to rewrite the rulebook in its segment, claimed Volvo chief designer Peter Horbury.

'I see this as the first of the next generation SUVs. It's no longer a niche vehicle because it is based on a normal car, and mounting the engine sideways has allowed us to offer extra space.'

The new car introduces RSC, a roll stability control that operates via a gyro sensor to cut engine speed and apply braking to one or more wheels if it detects a rollover risk.

It will also be Europe's first car to have night vision, an optional dashboard display using a heat-sensitive camera to allow the driver to see up to five times further ahead.

##XC90--none--Volvo Car corporation president Hans-Olov Olsson with the XC90##

VW displays 'GPS to go'

##Magellan--left## IN-car satellite navigation becomes 'GPS to Go' in a new concept car from Volkswagen, unveiled at the Detroit show.

The Magellan is a crossover vehicle, combining the features of a sports utility 4x4, an MPV, and an estate car, and powered by the 275bhp W8 engine now in the top-of-the-range Passat.

And for drivers with a taste for the outback, the Magellan's navigation system can be removed for off-road pedestrian guidance.

But the real innovation appeared not in the flesh, but in a scale model displayed in a glass cabinet.

This 'toy' Magellan had a detachable roof that doubled as a boat, and a caravan with an articulated centre that pulls out to extend the living space.

A legend is reborn

##GT40--right## FORD has dubbed its new GT40 concept as its 'comeback car' as the manufacturer rides out the global economic downturn.

The new car, unveiled at Detroit, echoes the GT40 of the 1960s which saw success at Le Mans on several occasions, although it is more than three inches taller and 18 inches longer than the original.

It is powered by a supercharged 5.4-litre V8 developing 500bhp and 500lb-ft of torque, and has been engineered for production feasibility. It was produced despite conventional thinking that a high-volume model might be the best solution to improve the company's fortunes.

GM recommits to Saab/Cadillac plan

GENERAL Motors insists its plans to bring Saab and Cadillac together in a twin-track prestige approach in Europe are postponed, not cancelled.

A victim of circumstance, the programme to combine Saab and Cadillac distribution in Europe, including the appointment of joint-brand dealers, was announced on the eve of the September 11 terrorist attacks in the United States. Since then GM has had to readdress its priorities and decided to invest in other areas of its business.

Mike Burns, president of GM Europe, said bringing Saab and Cadillac together would 'take a lot of money to do it right. It's not that we don't want to do it now or in the future, but it's not the right time to be spending our resources on it'.

The launch of the new Saab 9-3 is vitally important to GM Europe, demanding resources and management time that were in danger of being swallowed up by the European merger with Cadillac.

Burns added that Saab will continue to be GM's biggest selling premium brand in Europe for a long time to come, although there are definite plans to bring the Cadillac CTS Europe.

PAG makes quality vow for Range Rover

THE new Range Rover has made its public debut in the world's biggest 4x4 market by far.

Wolfgang Reitzle, group vice-president of Ford's Premier Automotive Group, took the wraps off the new luxury off-roader at the show, joking that few motor industry executives have had the chance to develop a car with one manufacturer and launch it at another — a reference to his career with BMW that developed the new Range Rover when it owned Land Rover, and then his move to Ford, the subsequent buyer of Land Rover.

He spoke emphatically about the impeccable quality standards that buyers could expect from the new Range Rover, and repeatedly showed groups of journalists around the new 4x4 highlighting panel fit and finish, and the solidity and robustness of its features.

Describing the original Range Rover as a design icon that broke new ground by bringing luxury to the 4x4 market, Reitzle was also circumspect about praising the current Range Rover, a car belaboured with a less than flattering reputation for reliability.

The new car will have to overcome any such problems, if it is to succeed.

'Our vision is to win back clear leadership in the SUV market and retain the pure design of the original, compete with luxury saloons and to be a top Land Rover off-road,' said Reitzle.

'We are confident this is the best quality Land Rover yet, and that it will transform our reputation forever, and we believe it will become one of the world's all-time great vehicles.'

Emissions tax is yet to bite, says Land Rover boss

THE full impact of the new carbon dioxide-based company car tax system has yet to hit the UK, according to the head of Land Rover.

With an exclusively 4x4 range the manufacturer does not have the strongest emissions tale to tell, but any negative impact this may have on company car drivers has yet to manifest itself, said Bob Dover, president of Land Rover.

Speaking exclusively to Fleet News, he said: 'We have seen a big increase in diesel sales, especially in Freelander, but I do not think the full impact of the tax has taken effect.'

Dover is confident, however, that 'there will still be a core that wants the cars whatever'.

The manufacturer is now integrated into Ford's fleet structure, and Dover highlighted the 'portfolio approach as what most customers are looking for, making us easier to deal with.'

The UK is Land Rover's biggest market, and company car driving industry chiefs are a key target market for the new Range Rover.

But the appetite for SUVs in the United States could see the American market eclipse the UK this year.

Freelander is selling well across the Atlantic, and with Range Rover volume limited to about 30,000 units worldwide in 2002, Land Rover's destiny could soon lie on foreign shores.

'A bright future' for Daewoo

NEW models in the pipeline have encouraged Daewoo's new 'boss-in-waiting' that the company has a secure future.

Speaking just one week after taking up his role as president elect, former Vauxhall chief Nick Reilly said: 'The new product has moved on a lot from an engineering perspective, and Daewoo has a lot to offer, including low cost production ability.'

The troubled South Korean car manufacturer is still making cars, but is in the hands of creditors. General Motors has signed a memorandum of understanding that it will pay $400 million for Daewoo, and that GM and its affiliates will then own two-thirds of the company, with the creditors owning the other third.

'Getting the company restarted and back on its feet is very exciting,' said Reilly.

But he also cautioned that Daewoo has several gaps in its model line-up, with no MPV and no sports utility vehicle.

Reilly also warned that Daewoo's groundbreaking consumer offers such as three years' free servicing and warranty had proved unrealistically expensive and that the company was unlikely to have the resources to continue with what he called 'inappropriate marketing activity'.

His first aim is to restore Daewoo's share of its domestic South Korean market, which has slumped from 28% to 14% amid the uncertainty over its solvency.

'Daewoo has got to be a standalone company and it also needs to bring something to the party, perhaps by offering products that GM currently does not have,' said Reilly.

Chrysler expands UK line-up

Chrysler Jeep UK will offer a common rail diesel engine in the PT Cruiser this spring and right-hand drive versions of its new Crossfire Sports Coupe early next year as it bids to improve its appeal to corporate customers.

The early development of the RHD Crossfire serves as testament to the UK's role as Chrysler Jeep's most successful export market.

Last year Chrysler Jeep grew its business by 14% in the UK, following a 20% expansion in 2000, and it is looking for a further 10% growth this year.

Simon Elliott, director of Chrysler Jeep UK, described himself as 'ecstatic' that the 3.2-litre Crossfire will be coming in UK specification.

'It could represent about 10% of our sales volumes - about 2,000 units - when we have the full range,' he said.

In the more immediate future, the PT Cruiser gains Mercedes-Benz's 2.2-litre common rail diesel engine in the spring, giving Chrysler by far its lowest carbon dioxide-emitting car in time for the new company car tax system in April.

But Elliott insisted Chrysler Jeep had not suffered despite having a range with relatively high fuel consumption and CO2 emissions. For example, in December alone it sold 450 Grand Cherokees, and the new 2.7-litre CRD diesel engine has given it a more competitive and fuel efficient power plant.

'We are continuing to reinvent Chrysler by filling new niches and with six models in the UK, Crossfire (pictured) becoming the seventh, we will have the widest range we have ever had,' said Elliott. 'And it is all incremental business for us, giving us the opportunity to grow our franchise.'

##Crossfire--none##