• by Karl Greenberg , January 7, 2015

Not the best week for Chris Christie. There’s the Jerry Jones potential scandal exacerbated by the Dallas Cowboys owner flying the New Jersey governor down to see the latter's "favorite team" (what about those Giants?) play, and then the man-hug in the skybox with Jones after the Cowboys won. 

And there's this little bit of news: Mercedes-Benz is leaving the Garden State for Atlanta. The automaker on Tuesday made the announcement, saying the move is to "better serve its growing customer base and strengthen the company's position for long-term, sustainable growth." It will also get the kinds of tax credits and cost or operations that New Jersey can't give. 

Said President and CEO Steve Cannon: "The state has worked tirelessly with us as we evaluated our options. Ultimately, though, it became apparent that to achieve the sustained, profitable growth and efficiencies we require for the decades ahead, our headquarters would have to be located elsewhere. That brought us to Atlanta." 

Cannon said Atlanta won partly because the move puts MBUSA near the Southeast, where it wants to grow share, and because it actually has a port-of-entry at Brunswick, Ga. and manufacturing in Vance, Ala., near Birmingham. It makes the M-Class and GL-Class SUVs, R-Class crossover and C-Class cars at the plant, meaning about half the vehicles it sells in the U.S.   

Joe Wiesenfelder, executive editor of Cars.com, tells Marketing Daily that the move is essentially about cost savings, not sales goals, "and honestly that's the best reason for the headquarters to be relocated. It's why Toyota is moving to Texas, and why Nissan moved to Tennessee. It's everything from taxes to cost of living. And it puts Mercedes close to its operations."

The South is one of the growth centers for luxury cars, per data from AutoTrader.com. The firm says that while Los Angeles and New York remain the largest luxury car markets in the U.S., their growth pace lags other cities. Chicago was up 30% in luxury sales last year, followed by San Francisco (29%); Dallas (28%); Houston (27%); and Miami (26%). Combined, per the auto shopping, and research firm, they are running at 28% ahead of a year ago vs the national pace of 20%.

Another recent move is Cadillac's decision to leave Detroit for New York, where it has no other operations. Wiesenfelder argues that even though Cadillac has no structural reason for the move, it makes sense from a brand development perspective. "I do think there's value in getting them away from GM, because there is a thinking in Detroit that is insular. And New York is where people making decisions would probably rather live, and it gives Cadillac the ability to hire the kind of people they want: luxury people, not gearheads. They will have better luck doing that here." 

The next issue for New Jersey is the extent to which Mercedes' departure from New Jersey will encourage other New Jerseyites BMW, Jaguar Land Rover, and Subaru to use a consequently stronger bargaining position to extract big monetary benefits and other enticements to stay. For Christie, that’s a Tylenol for another day.