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12° Nicosia,
06 December, 2022
 

Consumers to buy directly from automaker, not from dealer

Mercedes-Benz has reached an agreement with its European dealers to switch to a new dealership model

Source: autokinito.com.cy

by Petros Soutzis

...buyers may still want to follow the traditional procedure and start with a visit to the dealership, while others may go through the whole process online, including a virtual tour or a test drive...

Mercedes-Benz has reached an agreement with its European dealers to switch to a new dealership model, in which customers will buy directly from the automaker and not from the dealer, the German brand said.

The agreement with the European Mercedes-Benz Dealers Association, or FEAC, creates a framework for the introduction of a new sales model which will affect passenger cars and trucks. Britta Seeger, Daimler's sales manager, said that by the end of 2023, more than half of all new Mercedes vehicles available in Europe "should be sold with the dealership's new model". The company's sales model is expected to be released in Germany, Europe's largest car market, and in the United Kingdom by 2023, Mercedes said.

"With this agreement, we create a clear and predictable framework for European sales," FEAC President Friedrich Lixl said in a statement. Daimler CEO Ola Kallenius said in an interview with Automotive News Europe in June that the model would be implemented in some European countries as part of a broader digital transformation of the sales process.

Initial pilot projects have already taken place in Austria, Sweden and South Africa, Mercedes said.

In the current retail model, dealers buy their stock from automakers and bear the cost of promoting and maintaining the stock. They make a profit from the profit margin on the vehicles sold, but this margin can vary depending on the negotiations with individual customers. The dealership model transfers much of this cost to the automotive industry. Dealers will receive a fee per vehicle sold, as well as revenue from after-sales service. Profit per vehicle may be lower, but they will cover the difference by not having to incur expensive inventory and promotion costs.

Stellantis Group, created by the merger of the PSA Group and Fiat Chrysler Automobiles, announced the cancellation of dealership contracts from 1 June 2023, preparing for the transition to sales with the new model by 2026. The Volkswagen Group uses a dealership model for the sale of electric vehicles, from the ID series of the VW brand and Audi. Mercedes, in turn, said the benefits for customers would include greater price transparency and a greater choice of vehicles online. For dealers, "The new dealership model offers partners the opportunity to focus even more on customers and their support," the automaker said.

Some buyers will still want to follow the traditional procedure and start with a visit to the dealership, while others may go through the whole process online, including a virtual tour or a test drive of the vehicle. "We want to make it as easy as possible for our customers to interact with us," Seeger said in a statement. "It does not matter if it is digital or physical."

Due to US trademark rules, it is not possible for Mercedes to proceed with the same sales model as its dealerships there.

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