Conversation around the controversial direct-sales model is rearing its head once again, showing evidence of automakers' wishes to steer more of the retail process as the new-vehicle sales market evolves. Parts of a revamped sales model could be beneficial to dealers and the industry, but dealers should be wary of giving too much control to automakers.
Last month, Mercedes-Benz said it would cut 15 to 20 percent of its dealerships in Germany and about 10 percent globally in favor of a more direct sales model, where the automaker sets the price and dealers deliver the vehicle to the customer for a commission.
Other automakers, including Volkswagen and Stellantis, are also experimenting with the agency model in Europe.
The change may be indicative of automakers' true desires globally. Manufacturers have long tried to influence more of the retail model in various ways, such as requiring expensive dealership facility upgrades or publicly shaming dealers who flex their pricing power. Dealers should be cognizant of changes that significantly impact their business and restrict their independence. Retailers who agree to an agency model should be aware of potential changes to delivery fees. Those who remain independent, forgoing an agency model, should be wary of allocation punishment.
Mercedes-Benz confirmed that there are no plans for dealership consolidation in the U.S.