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MERCEDES-BENZ intends to switch to an agency model of selling cars in Australia in 2022, but the German prestige car-maker’s worldwide head of marketing and sales, Britta Seeger, has warned that any changes to Australia’s franchising laws could potentially crush its controversial retail plans.

Under the model, the factory supplies vehicles on demand to dealerships at a fixed price, and in Australia it will expand on the current online, one-price selling arrangement implemented late last year with the introduction of the Mercedes EQC electric SUV, which at launch was handled by nine dealers acting as agents.

Honda next year plans to be the first car-maker to introduce a similar retail program across all its models in Australia.

But speaking at an international roundtable meeting with journalists – including GoAuto – last week, Ms Seeger said: “If there are changes to the franchise laws, then we will reassess.”

Under her global remit, Ms Seeger, who is a member of the Daimler AG board of management and Daimler Mobility AG supervisory board, is the German auto giant’s leading spokesperson on digitisation, including online sales and aftersales programs and introducing new dealership models around the world.

She said the agency plan was “the future model for doing business”.

“In Australia, in order to be ready for the future, we needed to change our business model to move the dealer experience online, to make us fit for the future, and to increase our customer relationship,” she said.

“The best way to do this is to change from a franchise to an agency network.

“In Australia we have started with a close relationship with our dealers to find a common denominator to see how we can protect the business and the customer relationship for the future.

“The transformation required between us and the dealer is still going on in Australia and other markets.”

The agency program started last year with trials in Sweden. It is now in operation in Sweden and South Africa and is starting this year in Austria.

The program requires Mercedes-Benz to renegotiate its dealer contracts to allow it to control the sales process, with dealers handling customer service and deliveries in exchange for a set fee.

However, Ms Seeger said the program would not be introduced into markets where franchise laws made it too difficult.

“We have done this successfully in South Africa and in Sweden. Now we will enter Austria and, step by step, we will shift this business model to other countries,” she said.

“It’s not for every market. We are determined this is the right direction but we have to sort out individual markets where it fits. It will take some time.”

Asked if the US market was involved, Ms Seeger said that country had “a special franchise law”.

“So we cannot work with this and so we are looking at what is the right future for the customers in that market,” she said.

“If the regulator changes legal circumstances, we need to change our approach. So if this is the case in any market, we would need to reassess.

“We have many discussions with Australian dealers and we are finding the common denominator and we plan to switch over (to the agency model) with dealers within 2022.

“I know from many discussions that this is something to go forward in the future and I truly believe we will not see any other chances to provide the seamless customer experience.

Britta Seeger

“I truly believe this is the future model of doing things in automotive.”

Ms Seeger said the aim of digitisation for Mercedes-Benz was to increase the customer experience and make the buying and servicing process easier and quicker.

She said the company is aiming to sell 25 per cent of all its new passenger cars online by 2025, up from the current rate of less than five per cent.

But she said it was wrong to presume that dealers were being removed from the sales and marketing role in the Mercedes-Benz network, with interaction between dealer and customer expected in at least 80 per cent of sales and service cases.

“I cannot imagine going forward with this agency model experience without having any contact with the dealers,” she said.

“We want the customer to decide what they need to do and how much they want from their dealer. The customer has to be allowed to choose what they want.”

She said dealers “don’t have to change”.

“The dealer is still the ambassador to the brand. The agency model means no change to the customer except there is a no-haggle price,” she said.

“Dealers have a new role and if you compare with five years ago, the customer was visiting the dealer up to eight times before buying a car.

“Today, around the globe, because of digital, the visits are one or two times, if at all. Obviously, we discuss what this means going forward and then we are prepared for the new way of customers buying a car.”

She said dealers remain very important to the business case.

“We want dealers to remain profitable. They need a physical presence and we are considering how we can maximise this,” he said.

“We don’t want to lose any long-term dealer. I want to do this transition with the dealers.

“It’s not an easy process but I’m convinced we will find a common denominator with dealers.”

Ms Seeger said COVID-19 had also meant changes to the business.

“Customers are very much interested again in owning and buying a car,” she said of the trend since the pandemic started affecting global businesses in March.

“This we see as a trend again and opens up relations between our customers and our dealers. So we see changes with our dealers (such as digitisation and the agency model) being accelerated because of this.”

By Neil Dowling

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