Mercedes to scrap European dealerships and switch to direct sales as part of global distribution overhaul

Mercedes’ premium 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 offering off-road test drives.

“We have grown the network of our luxury brands by 30% in recent years, and it is in this direction that we will continue,” Fetzer said.

Last year, Daimler decided to cut costs by selling 25 dealerships in Europe, hoping to generate up to 1 billion euros in cash. This was part of a broader cost reduction plan announced by Kallenius in the fall of 2020, aimed at reducing operating costs by 20%. It also sold some German dealers to a Chinese investor in 2015.

The “tweak” move to reduce the number of dealerships will be accompanied by a move to the “agency” direct sales model in Europe, in which automakers bill customers directly.

“All of these efforts combined give us a competitive edge, but the full leap happens when we combine that with direct sales,” Fetzer said. “It gives us direct customer relationship management, and we will get to know our customers even better.”

At the same time, the automaker is targeting 25% 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.”

Under the traditional retail model, dealerships must fund their own inventory, promotions and branding. In exchange, they are free to negotiate prices.

In the agency model – so named because the automaker acts as a sales agent – ​​the automaker owns the inventory, bills the customer directly, and finances the brand. Dealerships deliver the car to the customer and earn a commission on each vehicle and can generate money on after-sales.

More and more car manufacturers are turning to the agency model in Europe, including the Volkswagen Group (for the Cupra brand and for electric vehicles from VW and Audi). Stellantis has canceled dealer contracts and is negotiating to switch 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 the traditional retail model.

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