Mercedes-Benz confirms Aussie online sales

Despite the outcry of local dealers, Mercedes-Benz’s global sales and marketing boss has declared the luxury brand is committed to swapping to factory-controlled fixed-price vehicle sales in Australia in 2022.

Speaking by phone to an international motoring media roundtable, Mercedes-Benz board member Britta Seeger defended the move from traditional franchise to agency dealer structure in Australia, describing it as “the future model of doing business in automotive”.

She confirmed the Australian switch to the “agent logic by 2022”.

Mercedes-Benz Australia will take responsibility for selling all models in its range at a non-negotiable price either online or offline via dealers.

The dealers will be paid a fixed amount to host demonstrators for test drives and deliver new vehicles, while retaining responsibility for servicing and used cars.

Under the current franchise system dealers buy their showroom stock from the manufacturer and negotiate a sale price with buyers.

Carsales reported the discontent the Australian Mercedes-Benz dealers have with the move to agency here. They voted overwhelmingly against it in 2019, but on instruction from global headquarters, the factory-owned local distributor has pressed on with the plan.

“We want to safeguard our business for the future,” said Seeger. “Normally in negotiation, we find a common denominator and how to put our business into the future orientation together with the dealers. That’s the key.”

Australia is not alone among Mercedes-Benz markets in making the move to agency. It has already been completed in South Africa and Sweden and is about to happen in Austria.

“Step by step, we are currently preparing the shift of the business models in many more countries,” Seeger confirmed.

Honda Australia has also announced it is switching to an agency model in Australia, where its dealers are also unhappy about the move.

Mercedes-Benz previously announced plans to generate 25 per cent of its global passenger car sales over the internet by 2025. Some major markets, such as the USA, won’t be going agency because of strict franchise laws.

Australia’s number one luxury car brand has had a practice run at direct online selling here with the EQC electric SUV and is about to expand that further.

Seeger has meet with Australian dealers at least twice over the agency move and described discussions as “intense”. She said the intention was to retain all current Australian dealer partners.

“I don’t want to lose anybody,” she said. “I want to do this transition … and transformation together with the dealers.

“It’s not an easy process because it’s a changing process, but I am convinced that we will find a common denominator to say we want to do this business together.

“Yes, with different roles, but not because us taking away something from the dealer but protects our business as best for the future.”

Negotiations between Benz and its Australian dealers over the move to an agency model and the compensation they would receive have reportedly made little progress in 2020 because of the coronavirus.

In a separate video interview supplied to media, Seeger explained why Benz was so committed to the agency model.

“What we wanted to achieve was reduce the complexity for our customers while we further increase flexibility and convenience.

“Additionally and of high importance for our customers is the pricing is transparent and we provide it uniformly across all the channels.

“Our customers really do appreciate price equality for our models and they do not have to worry about negotiating.”

Benz is understood to have delivered the same message to dealers. Presumably, being paid direct by the consumer for the car rather than funnelling it via a middle-man has its appeal too!

Mercedes-Benz is developing its retail strategies under the all-encompassing ‘Best Customer Experience’ banner. This was first launched in 2013 and was most recently uprated to ‘BCE 4.0’ in 2019.

“It guides us in providing a consistent luxury brand experience to our customers,” Seeger said.

“We want to make it as easy as we can for our customers and seamlessly merge all of our digital channels together with the physical brand experience for our customers from offline to online.”

Seeger said Benz was spending a “triple-digit million euro” amount every year on customer experience.

She revealed COVID-19 had accelerated the shift from dealer visits to online shopping.

“Car buyers used to come to the dealership in the previous times around up to eight times before they were buying a car, now it’s only up to two times because they research online beforehand.”

But she emphasised dealerships would always be essential, citing both the need to provide test drives and servicing, and the simple reality that some customers prefer offline shopping.

“The human touch will always be an essential part of our business,” she said.