Mercedes-Benz plans to introduce a direct-sales model in its home market of Germany, just weeks after launching the new system in the important market of the United Kingdom, according to Automotive News.
Before introducing the direct sales concept in the UK, the automaker tried the idea in a number of locations, including Austria and South Africa. Mercedes announced in 2021 that it had reached a deal with its European dealers under which the business would switch to the new sales strategy.
The company’s head of sales at the time, Britta Seeger, stated that by the end of the year, the luxury brand hoped to sell more than half of its European inventory through the direct sales strategy.
Ola Kallenius, CEO of Mercedes, said the decision is crucial for the company’s destiny. “You turn yourself from a wholesaler into a retailer. It changes your whole attitude in how you run the business,” he said.
Tesla has long used direct sales in the United States, despite opposition from many dealerships and regulatory agencies. Tesla continues to look for workarounds despite this.
The new model primarily helps the customer. Potential customers don’t have to worry about being taken advantage of, which is another benefit for the business (in this case, Mercedes) that saves money. Most likely, this would end the annoying practise of astronomical vendor markups.
However, retailers won’t be abandoned. In a direct sales scenario, they would serve as the customer’s agent and attend to their wants and concerns. Although respective dealers wouldn’t have to deal with other expenses related to maintaining a conventional dealership, profits per car sold might be reduced.
“If a customer makes up their mind that they want to buy a Mercedes, normally they are shopping around at several dealers. You move away from selling the price to selling the car, which should be the case in the premium market,” said Kallenius. This would make purchasing an EQS SUV, for example, a far more enjoyable experience than it currently is.
Sadly, there’s very little chance the Stuttgart-based automaker would trial this system in the United States. The CEO said local franchise laws make a move to the direct sales model unlikely, but the company has reached another agreement with American dealers. Customers can now buy over-the-air updates directly from Mercedes, albeit “in partnership” with retailers.
Rival company BMW also believes the agency method is the way to go but, like Mercedes, has no plans to introduce this in the USA.
