Mercedes’ new sales loophole to prevent dealer ‘rip-offs’

German brand is planning to adopt a radical new approach to selling cars, saying that buyers are complaining of being “ripped off”.

Mercedes is facing a revolt from its dealers over plans to sell its cars directly to customers at a fixed price.

The new Mercedes-Benz EQC electric vehicle will be sold for a set figure in Australia, preventing dealership staff from negotiating prices with individual customers.

The electric SUV costs $137,900 plus on-road costs, or about $150,000 drive-away. Mercedes will invoice customers directly and will not haggle on price.

Car makers are banned from setting prices for their dealer networks but by billing clients directly, Mercedes argues it is not breaking price-fixing laws policed by the ACCC.

Dealers dispute that view, arguing that the company’s dominant share of the luxury market will mean that price competition will be reduced.

While any dealership can service the EQC, only nine Mercedes Showrooms are allowed to sell the car to customers, who will pay the carmaker directly.

Customers can also order the car online, only setting foot in a dealership to collect their new wheels.

Mercedes-Benz is adopting a new sales model for the EQC electric car.

The brand is trying to roll the new sales model out to all its cars but has met with strong resistance from dealers. At a meeting last week, the dealer network voted overwhelmingly to reject the new model. Only three dealers out of 49 voted in favour.

Local chief executive Horst von Sanden says it is not his intention to freeze car sales and dealer staff out of the business.

“Really our intention is to cater to people who don’t need to, or don’t want to, or are sick and tired of going to a dealership,” von Sanden says.

“The biggest frustration for customers is if they haggle and then they go to a barbecue on Saturday and someone got a better deal.

“They hate the retailer for it because ‘this bloke has ripped me off’ … [fixed prices] are more transparent, more honest.”

The Mercedes-Benz EQC is being imported in limited numbers. Picture: Supplied.

Jason Nomikos, director of customer management for Mercedes’ regional arm, says customers do not enjoy negotiating prices with sales staff.

“It’s not often a pleasant experience for many, if not most customers,” he says.

“Not everyone feels comfortable during the negotiation.”

But dealers argue that some customers love the sport of haggling.

The chief executive of the Australian Automotive Dealer Association, James Voortman, said Mercedes’s attitude was disappointing and the comments would be “a kick in the guts” to the Benz dealer network.

“Recent research by Roy Morgan found that customer satisfaction among Mercedes Benz customers was 93 per cent, one of the best of all brands. The dealer network has worked vey hard to serve these customers and invested significant time, effort and capital in the brand,” he said.

“The relationship between Mercedes Benz Australia and its dealer network extends decades and to use terms like ‘being ripped off’ or ‘not a pleasant experience’ is very disappointing and frankly not very constructive.”

Dealers argue the new model will devalue their businesses, as they are effectively handing over customers to Benz for no money and no compensation.

They claim the model hasn’t been properly thought out, as they are still required to meet sales targets, deal with trade-ins and sell used cars. All of those tasks are made more difficult by the new sales model, they claim.

Von Sanden acknowledged that dealers would be paid less per sale under the new deal, due to Mercedes assuming marketing, finance and stock control costs.

“It does not have to have any negative impact on their business,” he says.

The Mercedes boss says the new scheme eliminates “unhealthy inter-brand competition” between dealers vying for the same customer.

“We will manage our pricing in line with market needs,” he says.

“The customer does not need to worry to get the right price.”

- with Richard Blackburn