Mercedes-Benz is going to sell the EQC electric car in Australia in a new way — one that reduces the role of conventional dealerships but claims to address buyer concerns.
It's also the latest brand to offer online sales for specialist models, something the likes of Toyota, Subaru and Genesis have previously tried, and in some cases continue to offer.
The model is to be exclusive to the EQC and the six other ‘EQ’ electric Mercedes models due here by the end of 2023. For now nine Mercedes-Benz dealers are signed up, in Sydney, Parramatta, Melbourne, Waverley, Brisbane, Gold Coast, Adelaide, Perth, and Canberra.
So how does it work? In essence you’ll buy your EQC direct from Mercedes-Benz, not the franchise dealer who actually delivers it. These dealers will instead focus on marketing, handing-off, and servicing the cars rather than actually selling their own paid-for floor stock.
Mercedes has trialled this model in Sweden, but Australia is still among the earliest adopters of the global template.
The current industry model sees car companies sell their products to separately-run franchise dealers on lines of credit. These dealers juggle their inventory, battle to offer the best quote, and make a profit of varying amounts, sometimes augmented by bonuses from the factory.
This means the dealership you buy a car from is generally not affiliated with the car maker in any way beyond a non-exclusive agreement to sell and service its product. That’s despite being the obvious face of a car brand for most people.
But with the EQ models, Mercedes-Benz Australia will never sell any stock to dealers and thus oblige the network to lure and keep customers. Instead, it will retain ownership of stock and sell them directly to buyers, merely providing dealers with demos for test drives and displays.
Dealerships will therefore become EQC delivery agents tasked with showing prospective buyers the car, answering their questions, and then helping them with the Mercedes digital showroom. Their sales commissions will then come from Benz, not from a sales contract with the buyer.
The digital showroom lets you check the national inventory rather than leaning on the dealer to hunt stock at other sites or foisting their own particular items on you, and is a one-stop shop for the car proper, its optional extras, and in-house finance should you want it.
If the car you want is in the inventory, Mercedes will fund its transport to your nearest partner dealer, which delivers the car. Or you can order a car online to be made in Germany and shipped.
It also means a fixed vehicle price irrespective of which dealer you select as your pickup point, spelling an end to the polarising practise of haggling, and allows people to buy an EQC online at home on the couch, in trackies, before or after a dealer drive if they wish.
“A purely online channel is not a replacement for the relationship a customer and dealer can have. But in this day and age we have to have an option for those who want to do the whole transaction online,” Mercedes-Benz Australia managing director Horst von Sanden told us.
While Mercedes-Benz concedes not all dealers on its council are over-the-moon, it says the old model needs a freshen-up because customers want new ways to buy cars, often ways that involve less high-pressure face time with sales staff.
“Customer’s expectations are changing. They’re more time-poor, want more transparency, and want more convenience and control ... People go in and hear about different pricing, options, based on the stock a dealer has. This is a simplification of this process,” said the automaker's director and customer management Jason Nomikos.
The model is different to Genesis, which plans to operate own stores with fixed pricing and online purchases enabled, because franchise dealers remain a delivery point under the Mercedes plan. In this way it’s also different to Tesla.
The new business model applies solely to sales of the supply-constrained EQC for now, officially on sale from December 9. For all other vehicles in the Mercedes-Benz passenger car range, existing sales and pricing arrangements remain in place.
“The nine EQ agents we have chosen to launch the EQC will focus even more strongly on conveying the emotions of the brand,” said von Sanden.
“We consider the new business model to be an opportunity for our authorised retailers to be able to help shape the future challenges within the automotive industry. It will allow us to offer our customers an improved experience and gives us the possibility to better recognise the customer’s needs and respond faster to them.”
Industry followers may recall the global head of Mercedes-Benz Cars, Ola Källenius, recently 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.
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 swiftly discontinued the brand locally due to lack of demand. Other recent examples include Toyota's Supra sales model.