Munich Sometimes Jörg Heinermann feels like a speleologist whose team only gave him a small headlamp as equipment. The head of sales at Mercedes-Benz in Germany knows roughly what is on his customers’ minds; it can therefore illuminate some corners in a figurative sense. But in the depths there is mostly darkness.
The manager cannot say with absolute certainty why, for example, a test drive leads to a sale and the next one ends in vain. He is missing important data that is only available to his trading partners.
“That is now changing significantly with the agency system,” explains Heinermann in an interview with the Handelsblatt. Anyone who buys or leases a new car with a star logo in this country has already signed a direct contract with Mercedes. Since Wednesday, however, control over customer data has finally moved from the 94 dealers of the brand to the Dax group.
Until now, Mercedes only knew fragments of the needs of its users, but now “a complete picture is emerging,” says Heinermann. With the help of self-learning algorithms, Mercedes will also be able to make more precise forecasts of expected sales volumes in the future, which in turn will make it easier to control production.
“Production and purchasing know what to expect a good three months earlier,” explains Heinermann. “That’s a huge competitive advantage.”
The most obvious benefit of the new sales concept is something else: from now on, the car manufacturer can set uniform prices in Germany and thus prevent discount competitions between the individual car dealerships.
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Internally, there is talk of a “small revolution”. After all, with 230,000 vehicles sold per year, Germany is Mercedes’ third largest sales market worldwide behind China and the USA. If the conversion of sales is successful here, the concept should be established in most European countries. This has already happened in Austria, Sweden and Great Britain.
However, the authorized Mercedes dealers have to give up part of their independence – they no longer act as entrepreneurs in direct sales, but only as agents. This fundamentally changes their work.
Dealers are increasingly becoming service providers who receive a commission of 6.5 percent per car or van sold if they provide successful advice and mediation. The Mercedes car dealerships in this country have agreed to the new structure – not least because the contracts were created for an indefinite period.
New cars are getting more expensive
Among the established vehicle manufacturers, Mercedes is one of the pioneers of the agency system. So far, the Volkswagen Group has only switched the electric cars of some brands to direct sales, but not the combustion engines. And BMW will only start in 2026 with a mixture of contract and agency trade.
The hesitation is probably also due to the fact that direct sales can have adverse effects on manufacturers, dealers and customers. Without the opportunity to haggle and play individual dealers off against each other, buying a car tends to be more expensive for end customers.
The dealers, in turn, are in danger of losing one or the other interested party because they can no longer put together a really individual offer. And the car manufacturers are saddled with the stock risk – the vehicles are a burden on their balance sheets.
The German sales manager at Mercedes sees many advantages in the agency system.
(Photo: Mercedes)
The return on equity of corporations like Mercedes is likely to fall slightly as a result of the agency system, predicts Daniel Röska from the asset manager Alliance Bernstein. There will also be “more violent swings in cash flow” than before. And the transparency of vehicle prices could boomerang in the event of falling demand. “If a product isn’t selling well, it’s much more difficult to hide it from the outside,” explains Röska.
In the worst case, it could happen more often that Mercedes has to reduce the list price of its two electric sedans EQS and EQE in front of the public in order to attract buyers – as happened last year in China. For Mercedes manager Heinermann, however, the advantages of the agency system outweigh the disadvantages.
This is also due to the fact that the supplier of luxury cars is investing in uniform IT systems in Europe in parallel with the development of direct sales. “By doing so, we eliminate duplicate structures,” says Heinermann. “It wouldn’t make sense if every sales partner tried to set up their own website and booking system.”
Large dealer death threatens
Those who find out about Mercedes vehicles should be able to switch back and forth between the digital and analogue worlds as effortlessly as possible – without having to sign a large number of different data protection declarations over and over again. Ordering a Mercedes online should be as easy as ordering a book from Amazon.
By 2025, the Swabians want to sell a quarter of their new vehicles digitally. Mercedes has already brought dozens of so-called “online car dealerships” online. In the case of digital transactions, the dealers also receive a commission. In return, their sales area is to shrink by 15 to 20 percent by 2028.
Concentration is already underway. More and more smaller retailers are selling their branches to large chains – across brands. As a result, the number of car dealers in Germany is likely to halve from 6,700 to just 3,800 by the end of the decade, predicts Stefan Reindl, director of the Institute for the Automotive Industry (IfA).
“The efforts of manufacturers and importers to implement direct and online sales models will lead to a further streamlining of the dealer and service networks – and thus further dynamically drive consolidation,” Reindl recently told the “Automobilwoche”. For drivers, the thinning out of the sales networks sometimes means that they have to wait longer for repairs and service appointments.
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