Mercedes-Benz unfurls factory-direct sales plans
Mercedes’ high-end brands will have their own dedicated outlets, with a Maybach store in Shanghai, an AMG outlet in Dubai and a G-Class “experience” in Austria that offers off-road test drives.
“We have grown the network for our luxury brands by 30 percent in recent years, and this is the direction we will keep on going,” Fetzer said.
Daimler last year moved to cut costs by selling 25 dealerships in Europe, hoping to generate up to €1 billion ($1.07 billion) in cash. That was part of a larger cost-cutting plan announced by Mercedes-Benz Group CEO Ola Källenius in fall 2020 that seeks to reduce operating costs by 20 percent.
The current “right-sizing” move to trim dealerships will be accompanied by a switch to the agency direct-sales model in Europe.
“All of these efforts combined give us a competitive advantage, but the full leap comes when we combine that with direct sales,” Fetzer said. “This gives us a direct management of the customer relationship, and we will know our customers even better.”
At the same time, the automaker is targeting 25 percent online sales by 2025. “Our customers are getting younger, wealthier and more digital,” Fetzer said. “They want to engage with us on multiple platforms, when and where they want to.”
Under the traditional retail model, dealerships must finance their own stock, promotions and branding. In return, they are free to negotiate pricing. But in the agency model — so named because the automaker acts as the sales agent — the automaker owns the stock, invoices the customer directly and finances the deal. Dealerships deliver the car to the customer and earn a commission on every vehicle, while also generating money on service work.
More and more automakers are turning to the agency model in Europe, including Volkswagen Group for the Cupra brand and for electric vehicles from VW and Audi. Stellantis has canceled dealer contracts and is negotiating to move to agency sales in 2023. BMW has experimented with agency sales in South Africa and with electrified models.
Toyota and Renault are among automakers that have said they will continue with the traditional retail model.