Mercedes dealers in Australia are suing Daimler

Munich Daimler threatens legal trouble in Australia. A group of dealers filed a lawsuit against the Stuttgart-based car maker in Melbourne on Tuesday. Accordingly, the Australian sales partners are demanding compensation from Mercedes-Benz amounting to the equivalent of 415 million euros for the impending “depreciation” of their operations, as stated in a press release.

The background to this is the plan by Daimler Sales Director Britta Seeger to roll out the so-called agency model in Australia as well. Customers no longer conclude purchase or leasing contracts with individual dealers, but directly with Mercedes. The advantage for the car manufacturer: At least at the state level, the group can set uniform prices for its new cars and prevent discount battles.

With this approach, the authorized dealers de facto lose part of their independence and no longer act as entrepreneurs but as agents. On the other hand, they receive a fixed margin for customer care and, for example, pass the warehouse goods risk on to Daimler, since the vehicles remain in the ownership of the group. The Swabians have already implemented direct sales in South Africa, Sweden and Austria, and in Germany there is an agreement in principle.

In Australia, however, more than 80 percent of the 53 Mercedes dealers in the country are now protesting. James Voortman, head of the AADA car dealers’ association, said for the group: “Over the years, dealers have invested hundreds of millions of dollars in building their businesses and are now in danger of losing that company value in one fell swoop.” who would have built their businesses over generations with ingenuity and hard work.

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Specifically, the dealers fear that in the course of the switch to an agency model, large showrooms for Mercedes vehicles could become superfluous in the future. In addition, many retailers are dependent on offering lower prices in order to be able to win customers despite the disadvantages of the location and to retain them. According to AADA, around 90 percent of retailers rejected the agency model in a survey.

Mercedes dealers fear developments like those at Honda

“It will also have negative effects for customers if, for example, dealerships close in sparsely populated rural areas and therefore have to travel long distances to pick up a car or bring it for maintenance,” emphasizes Voortman.

For example, Honda introduced a similar business model in Australia this year. As a result, the prices for Honda vehicles have risen significantly and the number of dealers has fallen drastically. The sales of the Japanese had collapsed by almost 39 percent.

The lawsuit is now the last resort to prevent a similar effect on the brand. “Mercedes-Benz ignored the dealers and their enormous rejection of the agency model and consequently failed to negotiate with the dealers about compensation for the goodwill,” said Voortman.

Daimler reacted calmly to the lawsuit: “From our point of view, the Mercedes-Benz agency model complies with all relevant Australian laws,” explained the group. Mercedes has been active in Australia since 1958 and now wants to continue working well with its dealers three years before the planned agency model is introduced.

Car makers want more information about their customers

The car dealers would play a “central role in the customer experience” – from research to purchase to vehicle handover. Customers received greater price transparency, better choice and greater model availability.

Last but not least, with the help of the agency model, Daimler tries to gain sovereignty over customer data. Amazingly, until recently, the manufacturer hardly had any information of its own about what users thought of its products as good or bad. The Swabians were dependent on the goodwill of their sales partners. That should change now.

Daimler board member Britta Seeger wants ordering a Mercedes to be as easy as ordering a book from Amazon. A quarter of new vehicles should be sold online by the middle of the decade. A number of other car manufacturers, including Volkswagen and Volvo, are also gradually converting their sales to an agency model.

“The vehicle manufacturers are clearly striving for a stronger role in the downstream area. Therefore, there will probably be more conflicts with dealers in the future, ”believes Stefan Bratzel, Director of the Center of Automotive Management (CAM). In his view, this is also due to the fact that car manufacturers will need far fewer physical sales locations in the long term, among other things because electric cars require less maintenance than combustion engines.

“The car manufacturers want to save sales costs and establish more direct contact with their customers in order to be able to sell them digital services more easily,” says Bratzel. The agency model is not per se bad for retailers, as long as they receive fair remuneration for their agency services. In Germany, Mercedes dealers will in future receive a commission of 6.5 percent for the brokerage of cars.

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