In a first in the Indian automobile industry, luxury automaker Mercedes Benz has decided to sell directly to customers. Termed ‘Retail of the Future’ (ROTF), the Direct to Customer (D2C) model changes the game for customers and Mercedes-Benz Franchise Partners. Living up to their 2021 motto ‘reimagine excellence’ Mercedes reinvents the old model of selling, wherein the original equipment manufacturer wholesales cars to dealers who then sell to customers.
What does this mean for buyers?
Franchises will still be the point of contact for consumers, who will serve as the conduit between the brand and buyers. The main advantage is the variety of choices for the consumer. They are no longer restricted by geographical location, or limited stocks available in their region; the entire MB India selection of automobiles is at their disposal. A common price will be established at all dealerships, which is offered by the company directly, online or at franchises. The one price for all reduces negotiations, increases transparency, as the invoice comes directly from MB. However, this new model is applicable only on new car sales, departments like Customer Service, Pre-Owned cars and allied businesses remain unchanged.
What does this mean for Mercedes-Benz Franchise Partners?
The stock of cars will be centralised, and owned by MB India, lowering the inventory costs of franchises to zero. A reduction of risk will allow dealerships to market a larger number of cars to prospective customers. Franchises will continue to do everything they have been doing in the past, be brand representatives, provide sales consulting, operate the network, organise test drives and facilitate the sale, but the stock will be owned by MB India.
Mr. Martin Schwenk, Managing Director and CEO, Mercedes-Benz India commented, “The advent of new sales channel have brought sweeping changes in customers’ aspirations and requirements, and being a customer obsessed brand, we have adapted our current business models to meet our customers’ aspirations and needs.”
The new customer centric approach will be implemented in India from Q4 2021 onwards.