Global head of Mercedes-Benz Cars, Ola Källenius, this week reaffirmed the company’s projection that up to one-in-four of its sales by 2025 could be completed to some degree online, outside the conventional dealer model, and potentially with lucrative fixed haggle-free pricing.
In his keynote speech at this year’s rather subdued Frankfurt motor show, Källenius said the world’s biggest luxury auto brand had reasons to be optimistic, despite the unprecedented challenges of electrifying half its fleet in around a decade and staying profitable.
“The world’s population is growing and people will be more mobile. Mobility means progress,” he said.
“And particularly for the Mercedes brand there is a second global trend: the demand for what is special. For outstanding products and experiences. The market for luxury goods has almost tripled in the last 20 years and will continue to grow.”
While product is obviously crucial to that, it appears to also necessitate changes in how prospective customers interact with the brand, particularly the newer and younger ones.
This might be through Mercedes’ app-based digital services that lets you (for example) update and monitor your car, buy updates, and find green-energy charging points. Or it may be visiting a pop-up brand store, part of what the company loftily calls the “seamless integration between digital and physical touchpoints”.
In Australia, one example of this is Melbourne’s Mercedes Me brand store and cafe, which is a more relaxed environment to absorb all things Mercedes without being whacked over the head with it.
Naturally we were interested in what this might mean for Australia, so we asked the CEO of Mercedes-Benz’s local division, Horst Von Sanden. He called the 25 per cent figure an “estimate” but said the path forward was quite open.
“There is no doubt that some customers are not only comfortable buying online, even a car, but will want to buy cars online’” he told us.
“...maybe your next question will be 'are you looking at online sales in Australia?' And the answer is of course we are.
“This buzzword of ‘omni-channel retail’ comes into play, but in the end it's the customer who decides what they want, and who are we to say ‘no, we're not looking at online’, if the customer wants to? So this is what drives us.
“I can't give you any announcements when and how and if we will roll it out, but at the moment we are definitely looking at it, and I think it makes a lot of sense.
“Especially with a trusted brand, how much information do some customers need? How how much test driving? How much discussion with a product expert?
“You already today see pop-up stores from our retailers in shopping centres occasionally, and I think any place where people can meet the brand is helpful for us, right?
"And then going back to Mercedes Me, which is purely a concept that allows people – and especially people might not have a relationship with us, who might not have a clear idea of what Mercedes-Benz stands for – to meet us in a relaxed, no-pressure environment and make up their mind way, or hopefully change their mind if it was a negative perception they had beforehand.
“[Maybe] they can do it without having a car salesman at their back asking them to maybe look at a car and sign a contract in the end.”
The obvious question, then, is are Mercedes’ franchise ‘brick and mortar’ dealers in Australia, who are already battling in a tough luxury market locally at present, worried at losing sales business and potentially becoming mere places of delivery and service for up to 25 per cent of buyers or more?
“No,” Von Sanden said.
“They do appreciate that, and you know in the end, we have seen a massive period of conquest sales, and I think one part of that is that our brand is quite likeable for a lot of young people these days, and to be honest that might have not been the case forever, but today we're actually a modern young brand, and people meet us in different locations.
“[However] I cannot imagine having a relationship with a brand without a relationship with people from that brand. Dealers will remain the face. I don’t believe in an online faceless brand entirely.
"But it’s also our job to offer what the customer wants, and if they want to order online and have it delivered... and even have a pick up service plan, it’s all driven by what they want.”
It’s worth pointing out Mercedes was one of the first brands in Australia to experiment with online retail alongside Subaru’s importer Inchcape. It offered its Smart city cars online in 2013, though given it swiftly discontinued the brand locally due to lack of demand (because of high pricing in a highly price-sensitive segment), it clearly was not a successful experiment at that point.
Today however, even market leader Toyota offers online retail with online deposits and dealer pickups, so it’s safe to say the market has matured.
Would you be prepared to buy a car online?