Mercedes to Slash European Dealerships in Move to Direct and Online Sales

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Photo: Mercedes-Benz

Mercedes-Benz executives said the automaker plans to cut its European dealership model in favor of a direct and an online sales system, according to a report on Monday from Automotive News.

The plans will oversee as many as 15 to 20 percent of dealerships in Germany cut, and around 10 percent worldwide.

The move accommodates the automaker’s plans to reach 25 percent online sales by 2025, with a whopping 80 percent of German sales being online in the same time period.

Mercedes-Benz is also looking to increase from its current five markets to as many as 20 by 2025.

“We need fewer large showrooms in mature markets,” said Bettina Fetzer, vice president communications and marketing. But the company is adding more showrooms in China, though. “We will move away from large showrooms, especially when we move to direct sales.”

There are no plans to change its U.S. dealership model, however, said the automaker. “We are committed to support our existing franchise model together with our dealer partners,” said Robert Moran, director of corporate communications for Mercedes-Benz USA.

Mercedes hopes the move will help it cut costs on distribution, and attract increased incentives that can further drive a growing customer base.

At a recent Mercedes’ capital markets day event, CFO Harald Wilhelm stated the company’s hopes to use a more direct-sales model to get closer to consumers in the years to come — not dissimilar from Tesla’s model in terms of pricing.

“We want to have more proximity to the customer and therefore have better control over pricing,” CFO Harald Wilhelm said last week at Mercedes’ capital markets day. “That’s why we are moving from the current dealer role.”

Mercedes-Benz unveiled its upcoming EQS electric SUV in April, and it’s set to hit U.S. markets this fall.

Electric automaker Tesla is a pioneer in offering direct sales to consumers, bypassing the traditional franchise model that widely remains in the U.S., Canada and other markets from legacy automakers.

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