Classic Center
Michael F. Kunz
Parts for Classic Cars
Are you as impressed as I am by the number of old Mercedes-Benz cars that you see being driven on an everyday basis? Are you equally amazed at the diversity of models and years that are on display or in the parking lot at any gathering of Mercedes-Benz enthusiasts? If there were nothing else that set our marque apart from other car marques, those two characteristics would be more than sufficient.
At the Classic Center, we’d like to believe that our efforts are a part of the explanation of this phenomenon. Certainly the business we do in supplying replacement parts for all of these older cars – a major activity for us – contributes significantly to keeping older Mercedes-Benz cars on the road, as well as on the show field.
I use the term “business” advisedly. Though the company benefits in obvious non-financial ways from the existence of this large fleet of older cars in active use – the cars are tangible symbols of M-B heritage and the quality that the company has always built into its cars – we do run our replacement parts activities as a business. For that reason, we expect to be around for a long time to come because the activity isn’t being done purely for its intangible benefits.
That being the case, readers of The Star may be interested in the details of how we do run this business and how it fits into the global structure and operations of Mercedes-Benz Cars. How is it that our company chooses to maintain this business in classic-car parts when few other marques do the same – or that we’re the only ones to physically maintain a U.S. location as an extension of the German-based operations?
Quite simply, it’s a matter of supply and demand. Because Mercedes-Benz originally built the cars with sufficient quality that they can last almost indefinitely when properly maintained, there is a large base of customers who want to buy replacement and service parts for their older cars. In deference to those needs, we can continue to supply parts for those older cars on a profitable basis and their owners can keep them on the road; so the demand continues.
But there obviously is more to the business than that. Let’s start with what the company considers a classic car and how that drives the business. In general terms, Mercedes-Benz defines one of its vehicles to be “classic” approximately 15 years after the model goes out of production, though if a substantial number of units of a given chassis series were produced over a relatively long period of time – the R107 for example – the model may be put into the “classic” category sooner than 15 years after the end of production.
So what happens when a car is declared to be a classic? That’s pretty simple: Up until that time, decisions as to which parts will be produced at any given time, how many, and by whom is made within the main new-car operations. When a car goes out of production, a stock of replacement parts is produced and put into inventory, and when the stock runs low for a given part, more of it (or the more current substitute for that part) is produced, based on projected demand. Parts are supplied through the authorized Mercedes-Benz dealer network, and to individual customers across a dealer’s parts counter through a web of computer systems, warehouses, and shipping operations.
When the model is redefined as a classic, then management decisions for the parts that are unique to that model shifts to the Classic Center operations. Parts continue to be produced by the company or by outside suppliers, they continue to be stocked in the same warehouses, ordered through the same parts management system with the same parts numbers, and supplied in the same way.
Only two things change. First, the decision as to whether a part will continue to be produced is made by the Classic Center management, and second, the part can be ordered directly from the Classic Center.
That’s where things get more interesting. How do we decide which parts to produce and stock, when and in what quantities? As a company, we take pride in the fact that in theory we could reproduce to original specifications every part for nearly every automobile model that Mercedes, Benz, and the combined company has ever produced. If we made the decision tomorrow to replace the cracked block in a model that Daimler produced in 1909, we could pull up the digital images of the original blueprints to do exactly that. But would we?
That’s where economies of scale and business parameters enter the decision. Even in the small numbers that the 1909 Mercedes was produced, there were substantial costs to set up the tools, molds, and jigs necessary to produce that block that today might run into tens of thousands of dollars. For a unique museum example, we might do that, but for a model that is not in demand by collectors, the costs would be unjustifiable.
Or to take a more mundane example; although we have the blueprint information for the dashboard of a series 123 sedan, preparing to produce it again would cost substantially more than the average cost of an individual unit when the car was new. Even taking into account the number of W123s on the road today, and the number that might need a new dashboard, the average cost of a new unit in the right color, just because of tooling and set-up costs, might be equal to the cost of buying a good example of the car with a nice dashboard that’s readily available on the market.
On the other hand, for those parts that we sometimes call “car killers” – those without which the car can’t be started or run safely and reliably – such as brake drums, windshields, or unique ignition parts, we might decide to absorb some of the costs in order to make the part available at a reasonable price, simply because without that part, the demand for many other parts on the same model would eventually dry up.
Even with these criteria in place, the company still stocks approximately 50,000 parts for cars produced more than 15 years ago, so we’re always a logical place to start when an owner needs a specific part. Of course, owners do have other options if there is not sufficient ongoing demand to allow us to continue producing it on a sound business basis. Be assured that our specialists on the telephones or at the other end of the Internet connection will be the first to suggest those. We like to think of ourselves as a “solutions provider” rather than a parts supplier, and our parts managers will suggest other sources, ranging from a substitute part that will fit the needs, perhaps with a little modification, to a good parts recycler or refurbishing service in the customer’s own area. After all, in our restoration shops we do exactly the same thing ourselves when necessary – we work from the same replacement parts stock – so we’re often the best source of knowledge and experience.
Stocking and selling replacement parts for automobiles from 15 to 125 years old is a fascinating business and nothing makes us feel better than when we hear that one of our classic’s owners won a trophy, drove a challenging long-distance rally like the Peking-to-Paris, or just drives and enjoys the car as so many MBCA members do. We’re not miracle workers, but we do take pride in knowing that we’re doing something few other automobile manufacturers wouldn’t even attempt. At the end of the day, particularly when it’s been a busy one, those are good feelings to take home.
Michael F. Kunz
Parts for Classic Cars
Are you as impressed as I am by the number of old Mercedes-Benz cars that you see being driven on an everyday basis? Are you equally amazed at the diversity of models and years that are on display or in the parking lot at any gathering of Mercedes-Benz enthusiasts? If there were nothing else that set our marque apart from other car marques, those two characteristics would be more than sufficient.
At the Classic Center, we’d like to believe that our efforts are a part of the explanation of this phenomenon. Certainly the business we do in supplying replacement parts for all of these older cars – a major activity for us – contributes significantly to keeping older Mercedes-Benz cars on the road, as well as on the show field.
I use the term “business” advisedly. Though the company benefits in obvious non-financial ways from the existence of this large fleet of older cars in active use – the cars are tangible symbols of M-B heritage and the quality that the company has always built into its cars – we do run our replacement parts activities as a business. For that reason, we expect to be around for a long time to come because the activity isn’t being done purely for its intangible benefits.
That being the case, readers of The Star may be interested in the details of how we do run this business and how it fits into the global structure and operations of Mercedes-Benz Cars. How is it that our company chooses to maintain this business in classic-car parts when few other marques do the same – or that we’re the only ones to physically maintain a U.S. location as an extension of the German-based operations?
Quite simply, it’s a matter of supply and demand. Because Mercedes-Benz originally built the cars with sufficient quality that they can last almost indefinitely when properly maintained, there is a large base of customers who want to buy replacement and service parts for their older cars. In deference to those needs, we can continue to supply parts for those older cars on a profitable basis and their owners can keep them on the road; so the demand continues.
But there obviously is more to the business than that. Let’s start with what the company considers a classic car and how that drives the business. In general terms, Mercedes-Benz defines one of its vehicles to be “classic” approximately 15 years after the model goes out of production, though if a substantial number of units of a given chassis series were produced over a relatively long period of time – the R107 for example – the model may be put into the “classic” category sooner than 15 years after the end of production.
So what happens when a car is declared to be a classic? That’s pretty simple: Up until that time, decisions as to which parts will be produced at any given time, how many, and by whom is made within the main new-car operations. When a car goes out of production, a stock of replacement parts is produced and put into inventory, and when the stock runs low for a given part, more of it (or the more current substitute for that part) is produced, based on projected demand. Parts are supplied through the authorized Mercedes-Benz dealer network, and to individual customers across a dealer’s parts counter through a web of computer systems, warehouses, and shipping operations.
When the model is redefined as a classic, then management decisions for the parts that are unique to that model shifts to the Classic Center operations. Parts continue to be produced by the company or by outside suppliers, they continue to be stocked in the same warehouses, ordered through the same parts management system with the same parts numbers, and supplied in the same way.
Only two things change. First, the decision as to whether a part will continue to be produced is made by the Classic Center management, and second, the part can be ordered directly from the Classic Center.
That’s where things get more interesting. How do we decide which parts to produce and stock, when and in what quantities? As a company, we take pride in the fact that in theory we could reproduce to original specifications every part for nearly every automobile model that Mercedes, Benz, and the combined company has ever produced. If we made the decision tomorrow to replace the cracked block in a model that Daimler produced in 1909, we could pull up the digital images of the original blueprints to do exactly that. But would we?
That’s where economies of scale and business parameters enter the decision. Even in the small numbers that the 1909 Mercedes was produced, there were substantial costs to set up the tools, molds, and jigs necessary to produce that block that today might run into tens of thousands of dollars. For a unique museum example, we might do that, but for a model that is not in demand by collectors, the costs would be unjustifiable.
Or to take a more mundane example; although we have the blueprint information for the dashboard of a series 123 sedan, preparing to produce it again would cost substantially more than the average cost of an individual unit when the car was new. Even taking into account the number of W123s on the road today, and the number that might need a new dashboard, the average cost of a new unit in the right color, just because of tooling and set-up costs, might be equal to the cost of buying a good example of the car with a nice dashboard that’s readily available on the market.
On the other hand, for those parts that we sometimes call “car killers” – those without which the car can’t be started or run safely and reliably – such as brake drums, windshields, or unique ignition parts, we might decide to absorb some of the costs in order to make the part available at a reasonable price, simply because without that part, the demand for many other parts on the same model would eventually dry up.
Even with these criteria in place, the company still stocks approximately 50,000 parts for cars produced more than 15 years ago, so we’re always a logical place to start when an owner needs a specific part. Of course, owners do have other options if there is not sufficient ongoing demand to allow us to continue producing it on a sound business basis. Be assured that our specialists on the telephones or at the other end of the Internet connection will be the first to suggest those. We like to think of ourselves as a “solutions provider” rather than a parts supplier, and our parts managers will suggest other sources, ranging from a substitute part that will fit the needs, perhaps with a little modification, to a good parts recycler or refurbishing service in the customer’s own area. After all, in our restoration shops we do exactly the same thing ourselves when necessary – we work from the same replacement parts stock – so we’re often the best source of knowledge and experience.
Stocking and selling replacement parts for automobiles from 15 to 125 years old is a fascinating business and nothing makes us feel better than when we hear that one of our classic’s owners won a trophy, drove a challenging long-distance rally like the Peking-to-Paris, or just drives and enjoys the car as so many MBCA members do. We’re not miracle workers, but we do take pride in knowing that we’re doing something few other automobile manufacturers wouldn’t even attempt. At the end of the day, particularly when it’s been a busy one, those are good feelings to take home.