Horst von Sanden

MERCEDES-BENZ Australia/Pacific managing director and CEO Horst von Sanden is maintaining a “neutral” position on the move towards an industry-specific franchising code for dealerships and insists there is no power imbalance between the company and its retailers.

Making it clear he was speaking as the head of Mercedes in Australia, not in his capacity as the president of the Federal Chamber of Automotive Industries (FCAI), Mr von Sanden told GoAutoNews Premium that the market-leading German luxury car manufacturer relied heavily on its dealers, who themselves wielded plenty of power.

He also said that issues identified by the Australian Competition and Consumer Commission (ACCC) did not relate to every car company but did tarnish the reputation of them all.

As reported, these issues centre around tenure, including non-renewal notices and end-of-term agreements, constraints when addressing consumer complaints, and non-reimbursement of warranty repair claims.

Mr von Sanden said he believed the current non-automotive franchising code, which is up for review in 2020, “covers most things” but that he was prepared to discuss with dealers the need for more specific regulation.

“I’m open minded for discussions, but I don’t want to complicate things for the sake of having a specific code,” he said.

“So we will discuss it, and I’m neutral. I’ve always had an opinion that we can only have a successful business if we collaborate with our retailers, so any kind of hostile relationship is not possible to deliver a good result, and for that reason if there is a need to give dealers a certain protection or whatever, I’m not against it.

“You never have all dealers being happy with what you do, but I think we do have a track record of quite a high dealer satisfaction and we do generally respect the high investments dealers make for our brand, and help us to be successful, and for that reason I also believe they have a right to be treated respectfully and fairly.”

Mr von Sanden said any support for an industry-specific code from the company would depend on “how it’s being handled”.

“I can only say I’m an absolute believer in good, healthy and amicable business relationships with dealers and if that requires a different code, so be it – let’s discuss it,” he said.

When asked whether Mercedes nonetheless needs to address the power imbalance between car-makers and dealers, Mr von Sanden said: “I don’t see a power imbalance in our camp.

“Probably the dealers see it differently, but power imbalance on paper (there) might be, but power imbalance in daily life, I don’t see that because I think our dealers have an awful lot of power. If they don’t do the job for us, we have a massive problem.”

The Mercedes chief also said that concerns identified by the ACCC and other parties, such as dealer representative bodies and politicians, did not mean that all OEMs were exerting significant pressure on dealerships.

“That’s the problem, right? They are collecting all the bad examples from the industry, and not every OEM does any (or all) of them,” he said.

“Some do ‘this’, the others do ‘that’, but then if you put it all together, you have a scary story – ‘Look at the bloody car industry, what they’re doing to their dealers.’ But that is not every OEM, it’s just a summary of all the bad behaviour, and that’s why I’m pretty relaxed.

“I do not think we’re engaging in a lot of bad behaviour in that regard at Mercedes-Benz.

“I’m sure if you asked 15 Mercedes-Benz dealers you will also find three or four who complain … It’s just human life that you have disagreements.

“But we do an annual dealer satisfaction survey and over the last 10 years or so our dealers are generally pretty happy with the way we treat them, and we are not on record with sacking dealers unreasonably … we’re not doing this warranty extrapolation stuff like others do.

“So they’re all examples which are floating around and which are being put on the car industry in general, but as I said, it’s only done by a few and that does impact the reputation of the OEMs.”

The Mercedes chief also pointed out that the company had a longstanding policy in place where dealers received an extended contract if they built a new facility or completed a major renovation.

“So we do appreciate those efforts the dealers make and those investments, and we try to reward them for that,” he said.

The Australian Labor Party last month committed to implementing an industry-specific franchising code for new-car dealerships if it wins the forthcoming federal election.

The announcement was welcomed by the Australian Automotive Dealer Association (AADA) and other organisations and retail advocates, while the FCAI, which represents the interests of the car-makers, has expressed concerns about the potential for over-regulation of the industry.

AMG Sydney

Mercedes has no plans for second standalone AMG store

MERCEDES-BENZ Australia/Pacific has no plans to open a second dealership dedicated exclusively to the AMG performance brand, following the opening of the Sydney outlet in December last year.

Strategically located adjacent to the domestic terminals at Sydney airport, the dealership’s opening heralded the world’s first dedicated sales-and-service showroom for Mercedes-AMG vehicles, and the second standalone AMG showroom after a store opened in Tokyo earlier last year.

While the German prestige luxury car manufacturer is continuing to develop AMG-specific areas in its general dealerships, Mercedes-Benz Aust/Pac managing director and CEO Horst von Sanden said there were no plans for another standalone AMG outlet, whether in Melbourne or another capital city.

“We have a plan and that is more or less in place as we speak, to have dedicated AMG areas in dealerships of a certain size, and obviously the ultimate is that standalone performance centre,” he said.

“But there is no plan to have more of those performance centres, so we’re not pushing dealers.”

By Terry Martin