7:08 am, June 19, 2023
Mercedes Benz UK CEO Gary Savage told Car Dealer his customers like the haggle free way it is selling cars – but our readers are not so sure.
In an exclusive interview, published on Friday, Savage said Mercedes had introduced the agency model as a direct result of requests to improve profitability from its dealers.
He said customers prefer the new process and that the feedback the brand has received so far has been overwhelmingly positive.
However, the brand’s market share has fallen and commentators have said much of its volume this year has come as a result of forced sales into fleet and short term rental channels.
Savage’s comments can be read in full in this interview and you can hear what the experts – and one anonymous dealer boss – had to say here.
Here’s a selection of the comments we’ve received since the interview was published.
The retired car dealer’s view
I spent almost 30 years selling Mercedes-Benz motor cars but retired shortly before the agency model was introduced.
Had it been introduced earlier there is a possibility I would have stayed a while longer, most customers don’t enjoy the haggling process and my experience was that most sales executives didn’t either.
On the contrary, we hated it. It’s very frustrating spending hours with customers, taking them through the various model options, purchase methods and test drives to lose the sale for what in many cases in my experience was for amounts of less than £100.
It will be interesting going forward to see how dealers remunerate their sales staff. With the fixed price agency model, is there still the need for sales executives with proper selling skills to close a deal and secure the registration for their site or not?
I think these attributes in time will be lost, with each sale’s cycle the customer will be being re-educated and that they will no longer be spending hours with their knowledgeable sales executive, they will have to do their own research and answer their own questions before entering the showroom or going online to search for their next car.
I think you will see a move towards lower paid order takers and a higher turnover of staff as they realise they can no longer make the living they once enjoyed.
That said, and in the dealers’ and manufacturers’ defence, they shouldn’t feel guilty about making a profit, after all they are a business and not a charity.
I can remember the days when discount was a dirty word and dealers almost had a gentleman’s agreement and stuck to the price list.
I along with many others will be interested to see how it develops.
I’m sure, given time, there will be another rethink and things will be different again – one of the many things I learnt in the motor trade is that it just recycles and tweaks old ideas and with the next generation of ‘graduate’ managers trying to make a name for themselves it just depends which idea they want to rekindle.
Good luck to you all, I’m glad I’m no longer involved.
Former Mercedes car dealer boss, name withheld
The customer’s view
In your latest piece you’ve asked for feedback from dealers. I am not a dealer, but I am one of the ‘customers’ that Mr Savage seems to think are happy.
Not true. Here’s part of a letter I sent the Mercedes CEO.
I have sourced 5 new MB cars for myself and my immediate family in the last 10 years.
I really enjoy the process of evaluating a new car, which includes talking to invested, knowledgeable and well-trained sales people and looking at actual vehicles available for sale in a showroom.
This may well involve conversations with different dealerships, since as you may recall from basic sales training, ‘people buy from people’.
My most recent visit to an MB showroom resulted in the information (in confidence, so not part of the glowing ‘feedback’ you have referred to) that several of the sales people had either left or were in the process of looking elsewhere as a direct result of their apparent demotion to ‘order takers’.
Similarly I was aghast when I was told that one of the vehicles in the showroom that caught my eye was not for sale but that I could order one at a fixed price with an uncertain delivery date. It’s no wonder your market share is heading south.
In short, I regard this new method of doing business as a deal breaker. I can see why a fixed-price, nil-competition dictatorial system looks good to senior MB executives; perhaps you should spend a bit more time with real customers. This one won’t be in the future.
BTW, I’m in the recruitment business and Merc dealers are losing all their best sales people, who don’t much like being ‘order takers’.
They are losing relationships with long-term buyers. The situation on the ground is not a happy one, and there is a lot of ‘agency-washing’ going on.
I strongly suspect that Mr Savage’s claims that he is happy to sacrifice market share for profitability is a way of defending poor sales – I imagine the factory will be thrilled to see the volume of cars produced in decline. Market share in this market is everything.
Shaun McCarthy
The broker’s view
I just read your excellent article – we are a large leasing broker with multiple Mercedes dealer relationships and the apocryphal evidence from them is that Mr Savage has the party line off pat, however, the reality is rather different with dealers casting around for alternative sources of income and negotiating with new manufacturers who have stuck with the traditional supply relationship model.
Still, you gave me a chuckle!
Managing director, Leasing broker, name withheld
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