[ajmat]

It looks as if dealers are now reduced to financial loan agents who maintain a property, parts inventory and a service franchise.

What might be happening is in the long term, Mercedes might be planning to control entire retail and distribution and the entire customer experience.

Back in 2001, Mercedes terminated all the UK dealers with very little notice. They had to reapply and invest heavily, the dealerships were renamed Mercedes Benz of <town>. In larger cities, Mercedes built their own experience centres.

Now in all these new dealerships, Mercedes have recruited and placed Star Experts to assist in the sales etc. Am not sure about who pays for what.

The transition was painful, my relatives had Mercedes Benzs and the customer experience back in 2001 was terrible so they switched to BMW's.

[RevJ]

Originally Posted by RJK

I am curious to know why would you take it personally & feel insulted. If the product is priced correctly, would you still want the manufacturer to give a discount to make you feel not insulted? Using similar logic, would you negotiate in a high end restaurant as well (not talking credit card discounts) - say Zodiac grill? Admittedly, that restaurant was on the priciest end but both luxury purchases difference being product & service.

Toyota consistently follows this strategy with the Innova & Fortuner and gets away with it. I don't see people taking it so personally with Toyota, instead more and more people line up to pay for their exorbitantly priced products (that includes me with the Camry). So then why this differentiation for luxury marques?

Back to the topic at hand, if Mercedes can execute it successfully & other two Germans follow it, it will be very good! Standardise the sales process, eliminate the room for person's negotiation skills, so the person who bought the product in the beginning doesn't feel like a loser.

My thoughts about this topic exactly! If a customer or a prospective customer feels like the product is overpriced , comparisons should be of similar product. And if one knows there is something on a lower price level why not purchase it, rather than wasting energy in negotiation for a higher priced product?

Toyota has been successfully practicing this for years! The products have their highs and lows, being an ex-Toyota dealer employee I didn't even ask for any discount for the year back Innova Crysta I bought few months back , because it already had a healthy one. Buying a product for sticker price should be applauded, rather than brewing a mindset the product doesn't deserve the value! Kia is also on the same track.

Discount culture in India is selective, no one negotiates on luxury products from Italian fashion houses! But MB has Maybach, BMW has Rolls Royce and Audi has Lamborghini should give discounts!

No on negotiates on Apple products or accessories sticker price it is! All the German Auto marquees are the best in world, owing one should be a matter of pride and joy. I plan on taking a new MB soon, I hope they also bring the car configurator in India to my knowledge you can select a base model of 'N' ex-showroom price with selected kits and you can add-on all the optional. That will actually create more customers. Now who wouldn't like to kit-out a base model with high end music system, or body kits or wheels. I would like to, if the high end and base has same mechanicals!

P.S. Our Bhpians outside of India , can you please share the pricing or negotiations of new vehicles. I have read about Tesla practicing this, an in-depth buying experience would be a great.

[Equus]

MB is smoking something else! It doubt it work for the A/C/GLA class models. Is competition going to follow suit? I doubt Audi can make this cut. BMW could attempt but I have my doubts. This could be a blessing in disguise for the competition!

As a consumer, here is an interesting proposition:
Would you buy a C-class Progressive at at 63L OTR in Bangalore at ZERO discount
OR
buy an A6 Premium Plus at 70L OTR minus discounts at 63L final price?

Interesting times, ahead!

[Mad Max]

First off, almost all luxury cars in India are crazily overpriced. Even if we strip the RTO taxes etc. We can go down the path of debating input costs etc. but we can probably assume it wouldn't vary wildly between regions.

On top of this, the government pushes another mindboggling number with taxes. Frankly, even with all localization, the prices are quite steep. From a company perspective, if they are in Special Economic Zones, they pay very little taxes to the government (MAT is mostly applicable, most others are graded through the 15 year period). With the SEZ scheme sunsetting, it may start impacting their overall numbers.

Having said all that, I think the wage gap in India has become so significant that folks who can afford these cars are possibly no longer searching for that "crazy" deal (kindly excuse this community, we'll draw blood over a few thousands, for sure). So, this may work in their favor but for an aspirational first-time buyer, they will know that there's no room for negotiation and so may not even walk into the showroom.

It's exactly like the high-end restaurant example. We will admire it from afar, talk about that friend who goes there often and the amazing ad that comes on tv but we would never set foot in it, even if they launch specials on a random day. We start ignoring it because sub-consciously, we know it's not our thing. Hopefully, that doesn't become the case because at the end of the day, India's middle class is marching upward and they are a sizeable chunk and they WILL look for a deal.

[samitjain]

I believe, first time buyer may not have much loyalty among 3 Germans, but 2nd or 3rd time buyer do become brand loyal. So this ploy of Mercedes may not pay off in short term, but over a long term it make sense and more revenue for the dealers

[Axe77]

While in principle I am all for this approach, I have just one substantive issue with this at least in the Indian market. The big 3 have gotten so stupidly overpriced that they mostly only make sense through high discounts more often than not.

I have no problems with a lower band / range of discounts but unless they accompany that with some sort of correction on their default prices, then the customer is going to be the biggest lower.

[parekhakshar]

Now this may seem to be a good move but it is good only for the dealers. This means buying already overpriced cars at very less discounts. Not good for customer's point of view

[Merc_Freak]

This does not seem like a good idea IMO. Most luxury car buyers only take the plunge when there’s a healthy discount being offered. Even I bought my E200 mainly because there was a tempting discount being offered.

[The21st]

In an ideal condition, this is a great idea.
No need of bargaining and wasting time. No worries of 'Am I getting a good deal' or 'Am I cheated' or 'Did someone get a better discount' or 'Should I wait for December' etc. Customer can peacefully see the car, test drive them and buy them without any hassles.

This is possible only if Mercedes reduce the ex-showroom prices
Will they do that?
Will they accept that they were selling the car pricing it 10L more than the original value[which is already pricey for the badge]?
If they are reducing prices, I am waiting for the reasons they are giving.
If they are not reducing, other brands will have a good time.

[sampadroy]

Live presentation and announcement summary shared.

Source https://twitter.com/BertrandGDsouza?s=03

[GTO]

The full press release. Turbanator is the new scoopmaster . This will change the game in the luxury car segment.

Mercedes-Benz reimagines the future of retail sales for its customers; buying a Mercedes-Benz will never be the same again.

Introduces for the first time in India, an innovative ‘direct to customer’ sales model, offering a better luxury buying experience to customers

Termed ‘Retail of the Future’ (ROTF), the Direct to Customer (D2C) model is a win-win situation for customers, Mercedes-Benz Franchise Partners and MB India

-----------------------------

Four key fundamental changes through ROTF:
One Customer, One Price | Offered by Mercedes-Benz India directly via established franchise network and online | Centralized stock now owned by MB India | Centralized ordering and fulfillment now by MB India | Better financial health of Franchise Partners due to lower cost structure and zero inventory

Key customer benefits:
Larger pool for selection of cars available through Mercedes-Benz Franchise Partners, best prices directly from Mercedes-Benz India without having to negotiate, easier price comparison, seamless and simplified purchase process, complete transparency, sale and delivery of cars facilitated though our Franchise Partners, savings of time and effort

Key Mercedes-Benz Franchise Partners benefits:
Better financial health | Zero inventory carrying | No market facing risk | Hassle-free sales process | Improved customer relationship | Focused local market development and growth

• ROTF will be applicable for new car sales. Separate business lines including Customer Service, Pre-Owned cars and allied businesses remain unchanged

• All Franchise Partners of MB India have collaborated in implementing ‘ROTF’ in India, sharing the company’s ‘customer centric’ outlook and co-creating a future ready business model

• ROTF will be implemented in India from Q4 2021 onwards
Pune: Mercedes-Benz India, the country’s largest luxury car maker, today announced a fundamental transition in its retail business in India, by shifting to the futuristic and more customer centric ‘direct to customer’ model, called ‘Retail of the Future’ (ROTF). According to this new business model, Mercedes-Benz India will own the entire stock of cars, sell them via appointed Franchise Partners, invoice the new cars to the customers directly, process the order and fulfill them, offering one transparent price and purchasing experience for customers.

The primary roles and responsibilities of the Mercedes-Benz Franchise Partners include establishing and maintaining of customer contacts, development of the market and facilitating the sale of Mercedes-Benz cars. The customer oriented and futuristic ROTF model promises to be a beneficial proposition for customers, Franchise Partners and the brand, with the advent of digitization and changing dynamics of retail business world over.

Announcing this industry first ‘direct to customer’ model in India, Mr. Martin Schwenk, Managing Director and CEO, Mercedes-Benz India commented, “Reimagine Excellence is our motto for 2021, and a key reason for introducing Retail of the Future is to create an enhanced luxury buying experience for our customers. 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. 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. Retail of the Future is yet another pioneering effort from Mercedes-Benz for Indian customers.”

“Introducing Retail of the Future is a firm step towards establishing an ecosystem that is customer obsessed. 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,” elaborated Mr. Schwenk

Changes in effect due to ROTF implementation:

Customers:
• Can avail best price directly from Mercedes-Benz and transparent price comparison across the product range
• Cars will be invoiced directly by MB India and not by Franchise Partners
• A much simplified purchase process which is seamless and hassle-free

Mercedes-Benz Franchise Partners:
• Transitions to ‘direct to customer’ retail partners of MB India for new car sales
• Compensated by MB India directly
• Availability of larger pool of stock cars
• Reduced risk and no inventory

Mercedes-Benz India:
• Responsible for centrally managing the selling price of all new cars
• Responsible for owning and managing the entire stock of new cars
• Responsible for order processing and fulfillment

ROTF is only for new car sales:

ROTF business model is applicable only for sale of new cars. There will be no change in separate business lines including Customer Services, Pre-owned Cars and Accessories business when ROTF will be implemented.
What will not change due to ROTF implementation:

• Cars will be sold via Franchise Partners
• They continue to remain brand representatives in the market
• Responsible for developing customer relationship
• Franchise Partners will be managing operational handling of customer interactions
• Responsible for developing local market requirements
• Franchise partners will continue local retail marketing activities
• Responsible for lead generation and management
• Current showroom infrastructure will continue to remain the same

[carthick1000]

Now let us all wait for the price adjustments for Q4 2021.

[veedub89]

Would love to hear the dealers take on this development.
Are they happy?
Or did they agree with a gun to their head?

A major revenue stream just got taken away from them. Sure MB will give commissions but will they be similar to the margins being earned currently from new car sales?

[androdev]

The entire presentation can be summarised in one line: No more discounts for MB cars.

MB India is responsible for constant increase of luxury car prices. They have been doing this in a very smart way by creating new segments and maintaining a nice spread of the price range. There will not be any price correction. It's almost an informal cartel to kill the practice of discounting among luxury car brands with MB playing the big brother role. Luxury brands hate to be identified as cheaper (Audi suffers this to some extent) and if the market leader sets a new normal then others have no option but to follow.

They will figure out a way to keep dealers happy and profitable but it is bad news for discount-seeking customers. To be honest, I saw this coming. They were aggressively eliminating all situations that lead to huge discounts - you rarely saw any outgoing models or pre-BS6 cars, etc on a clearance sale.

Originally Posted by veedub89

Would love to hear the dealers take on this development.
Are they happy?
Or did they agree with a gun to their head?

A major revenue stream just got taken away from them. Sure MB will give commissions but will they be similar to the margins being earned currently from new car sales?

Dealers will have to earn their profits based on performance and customer experience, etc. and not by gambling with inventory. I am sure everyone resists change but I think it is not very difficult for dealers to adapt to this new model. There will be some tweaking to keep the dealers happy - MB dealers enjoy decades of goodwill and I am sure their interests are factored in.

[Wanderers]

I don't read much into this much hyped sale model. Please do not fall prey to such marketing gimmicks. Wait for things to emerge otherwise we as buyer can be on loosing end. Such direct to customer sale model is not new. Take simple example of Aqua guard water purifier, in 90s we had to book and wait for delivery by company and rates were fixed with occasional same for all scheme like freebies. When competition kicked in we started getting direct cashback from agent/salesman. Insurance business is another example, where we get cashback (not sure if I can call it kickback )

All I am saying is prospective buyers, please wait for some buying experience and do not give up on negotiation, whatever they may call about the policy. If a salesman states a policy, he also knows or learns how to go about such policy.
Its very simple for me, I would be in the market to buy Mercedes or BMW in few years but would not buy in to any such policies. No hefty discount, no Mercedes/BMW/Audi for me.