Mercedes Benz to launch direct-to-customer sales model in India

In a bold and pioneering move aimed at bringing in more transparent pricing for its customers, India's largest luxury carmaker Mercedes Benz on Wednesday announced a unique direct-to-customer sales model which seeks to do away with any kind of discounting at the dealer level.

With this, Mercedes said it will bear the cost of inventory directly on itself and offer one specific price for each model across the country. The invoicing of the cars will also happen directly at the company and not with the dealers, and customers will have access to a larger inventory pool managed and owned directly by the company.

To be rolled out from the last quarter of 2021, the primary role of the dealer would now be establishing and maintaining of customer contacts, development of the market and facilitating the sale of cars. With the burden of inventory cost taken out of their books, Mercedes said it would be beneficial for dealer profitability as well.

"This long-term strategic move will strengthen our customer focus by introducing a fundamental transition in the retail business in the market. It also will deliver a win-win solution for both customers and Franchise Partners, underscoring our clear vision for a future which is sustainable, empowering and digital," said Martin Schwenk, Managing Director and CEO, Mercedes-Benz India.

Also read: Daimler India shutters bus, truckmaking plant for three days over parts shortage

"It empowers customers to have a hassle-free and completely transparent customer journey, experienced never before. We are also glad to have the collaboration of our Franchise Partners in this transition, further empowering them to have significantly less financial and operational risks, resulting in a profitable and sustainable business model.  Franchise Partners continue as brand representatives, maintaining their strong connect with customers and striving to offer the best customer experience in the market. It also allows Mercedes-Benz to stay obsessed with customers and remain a future-ready pioneering brand, ahead of the curve."

With the invoicing now happening directly at the company, dealers would also not have the liberty to sweeten deals to acquire customers-an established practice in the Indian automobile industry. While that will come as a relief to customers who may otherwise fear that they may have missed out on a great deal, for bargain hunters it may not be good news.

"It is an interesting concept but let us see how it plays out. Indian customer loves a bargain and many feel aggrieved if nothing is offered. How they react to this will be key," says a dealer with a mass market car firm.

Also read: Mercedes Benz launches new entry level SUV GLA at Rs 42.1-57.3 lakh

Also read: Daimler's Q1 earnings beat market expectation on high prices, rising demand in China