Mercedes-Benz pushes to repair relations with Aussie dealers

As a sales slide increases, new local Mercedes-Benz leadership has declared it wants to repair the relationship damage with its retail partners caused by the controversial move from franchising to the agency vehicle sales model.

The new CEO of Mercedes-Benz Australia Pacific, Jaime Cohen, is at the forefront of the initiative, which comes in the wake of Federal Court action by former dealers.

“We are having discussions with the agents but we cannot really elaborate on a legal case,” Cohen told carsales at last week’s media launch of the 2024 Mercedes-Benz CLE and Mercedes-AMG GLC 63.

Australia was one of the first Mercedes-Benz markets to switch from franchising to an agency sales model. Since its start here, a sales decline has accelerated.

In 2021, Mercedes-Benz sold 28,348 cars and SUVs in Australia, according to official VFACTS data. In 2022, it sold 26,801 and in 2023 24,315 units.

It is currently on track to sell little more than 18,000 vehicles in 2024.

But Cohen made it clear the agency retailing model was here to stay in Australia.

“In many places, it is very well received; in other places, we have certain conversations like we have in Australia,” he said.

“But in the end it’s positive and I think it’s a good step for Australia.”

Mercedes-Benz introduced online fixed price agency retailing to Australia on January 1, 2022.

The agency model replaced traditional dealer franchising and meant dealers no longer purchased new cars from the factory distributor to on-sell to the public for a profit.

Instead, they became delivery agents, taking a fixed percentage commission for each car sold.

Mercedes shifted to agency in Australia despite opposition from its dealer network.

A 2021 Federal Court action taken by 38 of the then 49 Mercedes-Benz dealers claiming unconscionable conduct was lost in August 2023. But the ruling has since been appealed.

Cohen took over at Mercedes-Benz in Australia on April 1. His predecessor, Florian Seidler, oversaw the introduction of agency retailing in Australia and the breakdown in relations with dealers that came with it.

The new boss told carsales that “communication and creating team spirit” with Mercedes-Benz agents was one of his priorities.

“The agents are also interested in that,” Cohen insisted. “The agents are also interested in rebuilding with us.

“So it’s not a one-man show. I just came into an environment where all of us are interested, because we all are businessmen.

“We all want two things; one is, of course, for our businesses to be successful. But the other side is we represent a very strong brand with great products and there is a customer there that we have to look after, take care of and make sure we approach jointly – and that is what we are working on.”

According to carsales sources, a successful rapprochement would likely need concessions from Mercedes-Benz on such things as the terms of the agency agreement and the financial compensation for agents.

Cohen attributed Benz’s sales decline to a “combination of factors”. He did not specifically cite agency retailing as being one of them and expressed confidence a turnaround was coming.

However, he did admit that some finetuning of the agency model would be required going forward.

“That happened with the prior [franchising] model and that’s going to continue with this model,” he said.

“The basic framework will remain. We will, of course, develop the process, learn and adjust.”

Honda is the other legacy brand that has shifted to agency in Australia. It’s a move that has also led to legal action and coincided with tumbling sales.

Last week, Hyundai Australia revealed an intention to try and merge franchising and agency in an Australia-first retailing model within two years.

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