Mercedes-Benz won’t axe models under new fixed-price strategy

Mercedes-Benz Cars Australia has vowed not to cull its model range or cut entry-level variants along the same restructuring lines as Honda, despite the German prestige brand following a similar path in moving to an agency-style retail operation.

Under this way of doing business, which for Mercedes-Benz will be implemented from January 1, 2022 (six months after Honda), the brand’s dealers will simply act as a delivery conduit for the factory distributor, bound by fixed vehicle prices and other rules set by the manufacturer.

“In terms of VFACTS [new car sales] we’re almost winning every segment,” said Jerry Stamoulis, head of media relations at Mercedes-Benz Cars Australia.

“So to cut anything from a segment wouldn’t make sense.”

Honda recently revealed that under its restructuring program it will drop entry-level model grades and sacrifice half its annual sales volume in a bid to create a more profitable business with fewer dealers and what it expects will be higher rates of customer satisfaction.

Mercedes-Benz also plans to improve customer relations through transparent pricing and other means such as online purchasing for its entire range, but as the premium auto brand market leader it does not intend to lose that position to the likes of BMW or Audi.

The switch to an online-heavy presence is, however, expected to see each model range simplified to make it easier for customers to navigate through the purchase process and reduce complexity for the company.

And that could mean higher prices if the huge array of optional equipment now seen with most premium car brands is reduced and transferred to existing models as standard equipment.

Mercedes-Benz is not yet prepared to discuss how its model range will be affected by the switch to the agency-style business, or detail other aspects of how the new business will impact customers and dealers.

But Stamoulis said the company was always looking to match its product offering with consumer demand.

“From a model range we always assess the product portfolio, but it’s not directly related to our agency model,” he said.

“We’ve got such a broad range, everything from A-Class through to S-Class, and now GT Black Series. It’s important that our planning marries to what the consumer is looking to buy.”

Mercedes-Benz has already tested the waters with its first EV in Australia, the Mercedes-Benz EQC, which is sold exclusively online at a set price – $139,700, plus the statutory on-road costs that can vary between states and territories.

Volvo is looking to make a similar move to online sales, but with its current dealer network, as it prepares to transform into a brand that only sells electrified vehicles, while Hyundai has taken full responsibility for sales of its Genesis luxury brand, creating its own factory-run retail outlets and selling with fixed prices.