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· Posted on
February 21, 2024

Mercedes Benz Australia launches $650m court action against its mothership in Germany

Things are heating up between Mercedes Benz Australia dealers and Mercedes Benz HQ in Germany.

What's the key learning?

  • We are starting to see the breakup of car manufacturers and their independent dealer networks due to changing commercial arrangements
  • The commission-based model allowed car dealers to set their own price per vehicle
  • The agency-based model forces dealers to sell cars at a fixed price

Background: Mercedes Benz is a $140bn car maker from Germany. And it's pretty popular here in Oz too. It made more than $4bn in sales in Australia according to its most recent numbers.

What happened: Mercedes Benz HQ recently notified its dealers in Australia the commercial arrangements with dealerships would be changing. It would shift from a commission-based model to a fixed-price agency model.

What else: Mercedes Benz dealers in Australia ain't happy one bit. So now, they have launched a $650m Federal Court action against Mercedes OG. 

So what's the key learning?

💡 We are starting to witness the breakup of car manufacturers and their independent dealer networks. And Mercedes ain't the first. Last year, we also saw Honda push the 'agency' model on their dealers.

💡 The commission based model: Currently, car dealers operate as independent retail businesses. Mercedes sells its cars directly to car dealers who then sell the cars to consumers at their own set prices. That's why they can throw in the car mats ("special deal - just for you").

💡 The agency based model: Car dealerships will sell cars at a fixed price and earn a set commission per vehicle. All customer relationships will be owned by Mercedes Benz HQ. And Mercedes dealers in Australia don't like this one bit.

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