It wants more control over pricing and incentives.
During these wild economic times, most manufacturers are playing the ‘wait and see’ game when it comes to market expansion, especially in terms of brick-and-mortar showrooms, and as we’ve seen with local brands like Ford, many manufacturers are moving towards a build-to-order sales model that drastically reduces the need for physical dealerships. Not only does this move cut down on a brand’s environmental footprint, but it has another benefit that’s getting Mercedes-Benz accountants hot under the collar: moving to a direct sales platform gives the brand more control over pricing and incentives. Thus, the luxury automaker plans to cut its dealerships by 10% worldwide, and up to 20% in Germany by 2025, reports Automotive News Europe.
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz hopes to see 80% of European sales directed through its new direct sales model by 2025, and 25% of sales through online platforms. Mercedes-Benz is hoping to see the new sales model grow to 20 markets, up from the current five. Not only will this move save on distribution costs, but it will allow Mercedes-Benz to have a tighter grip on what sort of incentives dealers place on its vehicles. “We want to have more proximity to the customer and therefore have better control over pricing,” said CFO Harald Wilhelm, speaking at the brand’s capital markets day last week. “That’s why we are moving from the current dealer role.”
According to Bettina Fetzer, vice president of communications and marketing, the global reduction in dealerships will take place by 2025, while the German market will finalize its reduction by 2028: “We are constantly optimizing our worldwide sales network to improve our customer service and expect further consolidation of the locations in the coming years,” she said. Mercedes-Benz currently has 1,000 Smart and Mercedes sales and service outlets in Germany, and 6,500 worldwide. Maybach and AMG have their own dedicated outlets, and specialist operations such as the G-Class Experience in Austria also fall under the wider dealership umbrella.
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Fetzer notes that its luxury brands have grown well, and Mercedes-Benz is not looking to stop dealer growth in this segment: “We have grown the network for our luxury brands by 30% in recent years, and this is the direction we will keep on going.”
Along with the downscaling, Mercedes will switch to an ‘agency’ direct sales model in Europe. Under this system, the automaker owns the stock, organizes financing, and invoices the customer directly. Dealerships can still make a buck by delivering cars to the customer, and by providing after-sales services.
While brands such as Toyota remain committed to a more traditional retail model, others such as Stellantis and Volkswagen are also making the move towards a more centralized regime, with a greater focus on online customer experiences and streamlined online ordering systems. Socially awkward people around the world will surely appreciate this move.
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
Mercedes-Benz
