Mercedes obviously wants to replicate Tesla's direct to customer sales model, because it is reported that the company is trying to thoroughly reform its distribution model by reducing the number of dealers, especially in its European market. According to the report of Automotive News, the German luxury car manufacturer is planning to reduce the number of dealer outlets in its domestic market by about 15-20%**
The situation of the company's global customers will also change. However, these plans do not include the company's U.S. market. According to the report, Mercedes' goal also includes reducing the number of global dealers by 10%. With the reduction of dealer model, Mercedes aims to make online sales account for 25% of net shipments. To be honest, this is not surprising.
In December, 2021, Mercedes signed an agreement with the European Mercedes Benz Dealer Association to allow customers to purchase cars and vans directly from the company. The automaker hopes that by the end of 2023, the "agency model" will account for nearly half of the vehicles sold in Europe. The automaker has established agency models in markets such as Austria, India and South Africa, and plans to introduce the same model to Germany and the UK next year. Mercedes table so aims to establish a more direct contact and seamless communication channel with customers.
Reduce costs and deepen customer relationships
In an internal speech last month, Harald Wilhelm, the company's chief financial officer, outlined that "the direct selling model allows control over pricing." He reiterated this point at the capital market day of Mercedes and pointed out that the direct selling model not only allows more control over the pricing of vehicles, but also allows access to customers. Mercedes is eager to achieve the goal of sales model reform for global audiences by 2025. In addition, it also hopes to achieve this goal by 2028 in its domestic market, Germany.
Robert Moran, communications director of Mercedes Benz USA, told Automotive News that the company would adhere to its franchise model in the U.S. market and allow dealers to sell cars through offline and online channels. In addition to changing the way cars are sold, the company is also trying to reduce the number of large showrooms in "mature" markets, further reduce management costs and hope to deliver benefits to customers.
Mercedes has previously said that the agency model, especially when implemented online, can make the pricing of vehicles more transparent to customers, and also provide greater car choices. The company is now at a critical juncture, with the goal of cutting low margin products and electrifying its fleet in the future.