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Mercedes to cut 10% of dealerships, increase direct sales

Mercedes-Benz plans to shrink its worldwide vendor community over the approaching years, with a lot of the cuts to happen within the automaker’s dwelling market of Germany.

In an interview with Automotive DriftBreath (subscription required) revealed on Monday, Bettina Fetzer, Mercedes’ vice chairman communications and advertising and marketing, mentioned the cuts might be accomplished by 2025 for many markets. She mentioned cuts in Germany will run by 2028 and canopy between 15 and 20% of the dealerships there.

Mercedes has round 1,000 dealerships in Germany protecting each the Mercedes and Good manufacturers, versus about 6,500 for the remainder of the world. It is not clear if any cuts are deliberate within the U.S., the place most dealerships are franchise owned.

On the similar time, Mercedes will proceed so as to add dealerships in its much less mature markets, comparable to China. It is going to additionally transfer to ascertain smaller, boutique-style shops for its AMG and Maybach sub-brands, Fetzer mentioned. The transfer is a part of Mercedes’ lately introduced technique to give attention to high-margin, low-volume automobiles.

Mercedes additionally needs to maneuver to a direct gross sales mannequin, the place sellers promote inventory owned by the automaker, receiving a fee in return. This manner the automaker units the ultimate worth and immediately invoices the client. Mercedes needs this mannequin to cowl 80% of its gross sales in Europe by 2025. The automaker can also be concentrating on on-line gross sales of round 25% by the identical date.

“We wish to have extra proximity to the client and due to this fact have higher management over pricing,” Harald Wilhelm, Mercedes’ chief monetary officer, mentioned final week throughout an investor presentation, in keeping with Automotive DriftBreath.

Cadillac lately made strikes to cut back its vendor community within the U.S. by greater than a 3rd by providing money incentives to dealerships that select to shut down. Nevertheless, even with the cuts, Cadillac’s vendor community with roughly 560 dealerships remaining continues to be greater than rivals regardless of the model having fewer gross sales.

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