The company says that in the absence of a signature it will assume dealers are not proceeding under the new agency agreements that apply from January 1 next year and they will assume that those dealers have elected to no longer represent the brand in Australia.

Mercedes dealers have received “a pile of documents” that basically outline the German brand’s final take on the terms and operating conditions for the new agency sales model.

The papers sent to dealers include a new agency sales agreement for Mercedes-Benz new-vehicle sales as an agent, an agency sales agreement for the electric EQC brand and a new dealer agreement covering parts and service.

The covering letter says that, in effect, if dealers do not return their signed agreements by the end of August then MBA will assume those dealers will not be wanting to proceed as agents and are walking away from the brand.

However in a statement to GoAutoNews Premium, Mercedes-Benz Australia said: “An extension of time is available to any retailer who needs one.”

The feeling amongst dealers is that very few will not sign up – because they would be left with nothing of their years of investments in the Mercedes brand.

Unlike Honda, MBA is not sacking dealers and discussions with dealers on their role in the new agency sales model have been held across three and a half years.

Mercedes says the agreements have been amended over time following input from dealers, but dealers who contacted GoAutoNews Premium have voiced their displeasure at the way the agreements have turned out.

Essentially, one dealer said “most of the concerns we have voiced over this process have been ignored in the final terms and conditions within the agency documents”.

He said that there have been draft agreements over the period but the latest “stack of documents” contain additional surprise clauses or supplements that have placed a big demand on dealers and their financial advisors in the short time available.

One point that is worrying dealers is that the commission paid per vehicle sale, around 4.5 per cent, is variable and subject to meeting certain CSI measures and other KPIs and targets. If agents fall short of those required levels their commission is reduced.

This is the opposite to the commission structure for Honda in New Zealand which pioneered what was a successful agency model 20 years ago. Instead of punishing agents for not meeting targets and standards, the Honda NZ model rewarded agents for meeting targets by increasing their commissions from a base four per cent to up to seven per cent.

Mercedes-Benz Australia told GoAutoNews Premium that “the remuneration structure is designed to reward agents to deliver the customer service our customers and we expect of the brand” but the structure chosen, dealers say, delivers the reward by not imposing a penalty.

By penalising agents on KPIs, it leaves revenue projections agents plan to achieve on sales open to doubt because some of the thresholds and expectations are unknown.

This is especially the case with CSI where much of the customer satisfaction experience now passes from agents to the factory.

One dealer explained: “Agents won’t be responsible for ordering cars, pricing cars or specking cars. A lot of those things we’re not going to be able to control or affect. It is not fair or feasible to be judging dealers on CSI when so much is out of our hands.

“Part of what we’ve been arguing with them as well is that the whole buying process through a fixed price model is going to be different.

“So we don’t know how customers are going to react to that. So that’s not really fair to be surveying people against the same thresholds when the sales environment in the sales process is changing so dramatically.

“But we haven’t really got anywhere (with MBA) with that,” he said.

Mercedes dealers say they are also concerned the commission for sales of EQC EV models is significantly less than for the sales of Mercedes-Benz models and that the terms and conditions are different in the agency agreement for Mercedes and for EQC.

They say that MBA has not moved when asked by dealers for a common agency agreement and common remuneration structure.

The dealers say they are also concerned that in the changeover to agency Mercedes-Benz will lose market share and hand it to BMW.

Dealers say that they have been arguing that point with MBA for a couple of years but MBA is saying it expects sales to be the same.

It is fair to say that Mercedes dealers don’t share MBA’s confidence that will be the case.

Dealers say they are worried about MBA’s capacity to operate a lot more of the business and a lot more of the retail transactions than they do today – from afar.

One dealer told GoAutoNews Premium: “They are not on the ground doing it. People have concerns but there was not a lot of engagement. We tried. There were lots of submissions but no real engagement and no real negotiation.”

Mercedes-Benz Australia told GoAutoNews Premium that most of the information supplied to the publication by dealers “is inaccurate”.

The company said “the agency model has been developed in close collaboration” with its “retail network for the past three and a half years”.

“A draft agency agreement was supplied to our retail network in early May 2021 and any changes to the draft agency agreement were predominantly made in response to the requests from the retail network,” the company said.

By John Mellor