It has also drawn a suggestion by one industry analyst that dealers should find a wider commercial role for their dealer councils as cross-brand buying groups.

The article, ‘Mercedes casts dealer council adrift’, said that the head of MBA/P had written to dealers saying that they would no longer deal with its dealer/agency council.

The article said that a request by Mercedes-Benz Australia agents to the Mulgrave head office to engage with the national dealer council (NDC) or agents council (DAC) over a raft of unresolved agency transition issues was rebuffed by the company.

The Mercedes-Benz agents, via their NDC/DAC, had said that the council was concerned that MBA was not responding to its correspondence outlining ongoing concerns arising from the transition to the agency sales model by the German car importer. 

Wayne Pearson

But in a letter to the Mercedes dealer council, Florian Seidler the CEO of Mercedes-Benz Australia/Pacific and managing director of MB Cars told the head of the NDC/DAC Tony Jennett that the agents were welcome to operate their own councils but Mercedes-Benz would not have anything to do with them.

Instead he said the company would engage with dealers on a one-on-one basis.

Australian motor industry analyst and a former dealer, Wayne Pearson, who is a consultant with the motor industry services unit at Pitcher Partners Sydney, described the letter as “a call to action.”

He said that if OEMs were going to ignore dealer councils, it opened up the opportunity for dealers councils to pursue a wider role. Mr Pearson went so far as to suggest dealer councils could become buying groups across many brands built around source countries; all German imports, for example.

Commenting on the letter to dealers from Mercedes-Benz, Mr Pearson said: “The first rule of divide and conquer is divide. Dealer councils promulgate the imbalance of power between the OEM and the dealers.”

He said that if certain OEMs were going to ignore their dealer councils then dealers should think laterally to make their councils more powerful and more commercially productive.

“Dealers bring to the table three amazing assets:

• Large and loyal customers bases 
• Incredibly well positioned locations and first class facilities 
• Trained and capable people and processes mobilised to meet the needs of a geographically diverse customer base. 

“The OEM’s have one amazing asset; great quality stock. But stock without customers is a liability. Customers without stock are an opportunity,” Mr Pearson said.

“The dealer body in Australia has an incredible footprint and infrastructure. According to recently published by the AADA in its annual automotive statistics, dealers have 3000 rooftops, 60,000 people and millions of customers. 

“Dealers need to really start seeing themselves as an essential part of, and in a superior position, within the automotive landscape. 

“In essence, the  brands are the  supplier of products to their customers . This is no different to the way LG , Westinghouse and Apple supply products to Harvey Norman, The Good Guys and Bing Lee.

“Rather than unify around a single supplier (like a brand’s dealer council does), dealers should unify around the business model and operate as a national buying group from the brands that fit their model. 

“That dealer council can then source supply from the suppliers that give the best outcome for the dealer members and their customers,” Mr Pearson said. 

“In the end, a brand’s local market share is the inflection point of product, price and promotion.

“If the OEM does a great job on the product front, the dealer buying group delivers the best price into the market and the dealer continues to mobilise their 60,000 strong workforce to promote the product through their 3000 showrooms, then success is ensured.

“I strongly believe that the brands that embrace the dealer model in its traditional form will have significant market share growth, particularly if the dealers play to their collective strength and develop a strong dealer council buying group,” Mr Pearson said.

By John Mellor