NEW DELHI: India’s largest luxury car-seller Mercedes-Benz is ditching the traditional dealership model as a way to sell its passenger vehicles in India. Instead, Mercedes will now own the entire stock of cars, sell them via appointed franchise partners, invoice the new cars to customers directly, process the orders and fulfill them, and offer a single price-and-purchasing experience under a ‘direct-to-customer’ model. This system is expected to come into effect from Q4 of 2021.
At present, automakers in India sell their cars to dealers and not directly to consumers. Dealers have ownership of vehicles that are in their showroom or yard and also execute retail sales to end buyers.
While a few existing Mercedes Benz showroom owners welcomed the move saying that it would create a win-win situation for customers, their businesses, and the brand, dealers’ association FADA said that India is a very different market to try this global practice.
“Even though the model has tested waters internationally, India is a unique market where customer psyche is very different since they change dealers and even brands for any additional discount. Even though on the face of it, this model looks beneficial for the dealer community dealing in premium brands with low volumes, we will need to see if this model can work with mass market brands so that every dealer can benefit out of it,” said Vinkesh Gulati, President, FADA.
A dealer for another luxury car brand pointed out that, in India, dealers play a major role in closing sales. “A large portion of sales take place here because of the personal equation between dealers and customers. It will be interesting to see how this equation pans out,” the dealer said.
Mercedes noted that existing dealers would continue to do many tasks they have been doing in the past, including representing the brand, providing sales consultation, operating the network, organising test drives and facilitating sales. The new model, it said, will allow them to have better control over volume scalability and achieve price stability.