7:20 am, February 10, 2023
Mercedes Benz UK says it is ‘delighted’ with customer feedback to its new agency sales model – despite it getting a mixed reaction from the public.
The brand went live with agency sales via its website on January 1 with fixed pricing which it says ‘eliminates the need to shop around’.
Customers are given one price for the cars online, place their order and have it delivered via a dealer.
Mercedes retailers are believed to be being paid a five per cent handling fee on each deal they do, plus finance commission. The consensus is dealers are pretty happy with what they’re getting – so far.
However, market share for Mercedes dropped considerably in January – down to 3.8 per cent, compared to 5 per cent in December, and 5.5 per cent in the same month last year.
Sales were down 20 per cent in the month compared to January 2022.
Meanwhile, premium car brand rivals selling via traditional dealer agreements fared better. BMW achieved 5.9 per cent market share in January, while Audi captured 6.8 per cent.
Despite this, Mercedes insists the agency sales model has been a success.
CEO Gary Savage said: ‘The launch of our agency model is a hugely exciting time for us and our network – providing our customers with a range of benefits.
‘In an increasingly digitised world, customer-buying habits have changed – and an agency model provides a consistent and transparent purchase journey – whether that’s online, in a physical showroom, or a combination of the two.’
A growing number of car manufacturers are planning agency sales models of their own. Stellantis has said it will move to an agency sales model in 2024 (but has delayed it) and Ford is planning a similar move soon. But others, including Mazda, Suzuki and Renault, have all ruled it out for now.
Publicly, those dealers facing agency sales models say they support the idea, but privately it’s a different story. Car Dealer hasn’t spoken to one group boss yet who thinks it’s a good idea. One even gave agency sales plans just ‘six months’ and another said they thought they would be a ‘total disaster’.
Agency sales are seen by many in the motor trade as a land grab from car manufacturers who want to take a larger slice of new car margins.
‘They’ve watched as the motor trade has enjoyed an incredible couple of years in terms of profitability thanks to high demand and reduced supply meaning we can sell cars at full margin – and they’ve thought they want a slice of that for themselves,’ one dealer boss told Car Dealer.
‘But is it really better for the customer? Do they really want to buy online at fixed prices? Most of my customers want to haggle a bit and get a deal.’
Feedback on the Mercedes Facebook page to the agency sales model has been mixed.
One customer posted: ‘The new way could be anticompetitive. New fixed price – dealerships have little say on new car pricing.’
Another customer added they thought ‘fixed pricing will not work’ and said: ‘I’ve had Mercs for years including three new – no more.’
Mercedes insists, though, it thinks its ‘online showroom’ offers a ‘truly seamless omnichannel experience’.
Savage added: ‘Under our new agency model, pricing is transparent for our customers wherever they choose to buy, eliminating the need to shop around. This means customers can be confident they will always get our best price.
‘Initial feedback shows customers are enjoying the simplified buying experience, with an average 5-star rating of 4.7. Feedback includes “very easy, simple, quick process” and “I like the transparent price so no need to shop around”.’
Mercedes will launch a new TV advertising campaign promoting the agency sales model this weekend with adverts during the England v Italy rugby match.
Agency sales will also be one of the hot topics discussed at the forthcoming Car Dealer Live conference at the British Motor Museum, Gaydon, on March 9.
Franchised dealers – including Mark Lavery, CEO of Cambria Automobiles – will give their views on agency sales at the special event. Tickets are available now.
Car Dealer Live – the future of the car dealer – exclusive conference features talks from leading car dealers, Google and Auto Trader among much more. Find out the full event details and book tickets.
