[a4_attitude]

This situation might be created due to dealers. They might be creating pressure for extra discounts as they stock more or invest higher.
So maybe, the older loyal ones started having a problem. Now, they might have come up with a average % of the profit, which every dealer makes. They will promise that, fix profit, and the balance will be passed on to the customer. This is what should be effectively done to win customers.

On the other hand, talking about BMW, if prices remain the same as before, then it's a just a marketing strategy to build the brand as the biggest of all Germans. Not sure the others will follow. They will wait and watch and might try use this as opportunity as anyone going to buy his first German will definitely check with BMW at least, if not with Audi.

Audi - I don't think they have a choice to be or not be part of this strategy. People know Audi as "anytime discounted Diwali deal offer".
No offence to Audi users. Just sharing my general view about these three brands.

[Venkatesh]

FADA president welcomes Mercedes-Benz India's new retail dynamic.

Vinkesh Gulati, President, FADA, said, "On the face of it, it looks like a very good strategy. Any dealer would be happy if he is able to minimise the inventory costs. In this case, not just the interest on unsold inventory, even the stockyard and pre-sales expenses will be completely eliminated," he added.

Gulati explained that most dealer principals are even used to giving a collateral in terms of their residential properties to build up an inventory of these high-end luxury cars on credit. "Now, we would be secured about that expense and it would be a win-win for dealers," he said.

When asked about several benefits to customers and dealers, will other players follow in the footsteps of the luxury car market leader in India?

Vinkesh Gulati said, "It will not be so early. Only the premium players can do it because the volumes are low and they can still control a small number of dealers,"

Source

[LPJ777]

Bargaining for a deal is very much a part of the car buying process here in India. With a D2C approach, it's going to be a 'take it or leave it attitude' on the sales front at MB India.

I'm reminded of how Apple sells it products. You walk into any Apple store in the country, the likelihood of getting a discount on MRP is very minimal. Apart from the cashback offers put forth by certain partner banks, there's not much room for bargaining.

What I do foresee is that the standard models may be sold at a fixed price and probably they may offer certain discounts on say variant upgrades, optional extras or extended warranty, service packages etc. Alternatively, it could special financing deals in partnership with banking partners. Lastly, they may offer special festive deals, clearance sale etc to move inventory.

From a dealer's perspective, his capital investment is significantly lesser now which can reinvested in bolstering customer service or may be even in other verticals.

Unless other brands like BMW, Audi etc. follow-suit there will be a chunk of potential customers who will be swayed away to these brands on the basis of better value proposition.

I wonder what the impact will be on the used car market, would the rate of depreciation be same or will it be different given that most first owners would have pocketed a significant discount at the time of purchase wherein the depreciation hit when selling the car is somewhat cushioned in the short term.

[Axe77]

Originally Posted by GTO

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

I can think of certain advantages of this from a customer’s advantage - but getting the best price deal is not one of them given how bloated the MRP on these cars is currently.

PROS:
- Wider range from a central inventory book;
- Less of an issue with MB, but bookings with a giant auto company is better than dealing with individual dealers who sometimes go bust and leave in process buyers who have given advances high and dry.
- The dealership experience will be much better since their USP in this model will be how well they can treat and service customers both before and post purchase.

CONS:
MBs are going to remain expensive to buy now. Although, market forces can’t be ignored and if BMW and Audi are busy giving hefty discounts, MB India can’t be completely oblivious to the discounted rates being offered by their competition. The flip side is that if MB holds on to prices more firmly, it may allow BMW also to limit their own discounting. Not sure how this will play out ultimately.

All in all as a concept I can definitely see some merits of such a model for all parties concerned. Dealers included. It actually reduces their capex pressure and inventory load and hopefully they can utilise their capital towards providing the customers a better service on all fronts. Smart for MB too since by reducing the inventory pressure from the dealers the consequent financial gain of holding their inventory can also be pocketed in part by MB India. I just hope in expensive markets like metros, the cost of maintaining real estate of their showrooms can be met by the (presumably lower) commission type compensation this new structure will lead to.

[sampadroy]

Opinions of renowned automotive journalists and FADA President. Even they seem to be apprehensive.

[sramanat]

This is exactly what I was suggesting in the interview with BBT and another dealer threads. Inventory management by the dealer isn't justified for the volumes that are moved in India. The company should own inventory, the dealers should facilitate the buying process. If this catches on, I'd expect online businesses mushroom and thrive - price comparison, model comparison and the likes.

[Turbojc]

Here are a few questions I have:

• Will Mercedes dealers earn as much as they used to or more with this new sales model?
  
• How will they be incentivized to push sales – on a per unit basis or a volume basis?
  
• If they are incentivized on a volume basis, will they be allowed by MB India to provide dealer-level offers/discounts in order to drive sales?
  
• How will this model affect individual salesperson commissions?

Direct-to-Consumer retail is going to be the future of the automotive business, but whether it’ll work in a discount-loving India is something that remains to be seen. The way I see it, other luxury car makers and dealers will keep a close eye on Mercedes over the next few quarters to see if this new sales model works. If it clicks, brands like BMW and Audi could face pressure from their dealers to implement a similar strategy.

[Pancham]

Keeping all these marketing strategies aside, if I have a poor sales experience, do I call the dealer or MB directly. If it is the latter, will the sweet lady or the gentleman on the other side of the call direct me to contact the dealer in case I face any issues?

If I am able to derive a true MB buying experience and not a ‘dealer’ experience, I can still vouch for this strategy. But this essentially means the company will be held answerable/responsible/accountable for the sales experience.

[DonHyd]

As a customer, I appreciate fixed price deals as I hate bargaining. You buy a car today for 50 lakhs and tomorrow your neighbour buys the same car for a couple of lakhs less just because he bargained better. Don't you feel cheated? Not just cars, this applies to every big ticket purchase especially real estate.

However, ideally MB should officially reduce the prices by the extent of average discount that was being offered till now on every model. Then, fix the prices. However, if they say no discounts, no price corrections, it depends on BMW's response.

[hrishig]

So, when are we going to see an official correction in GLA prices?

[GNG19]

As someone who hates haggling, the move sounds great. With one big factor being MB rationalising the prices of their models.

I would imagine they'll do this for the higher-moving models anyway otherwise competing with BMW and Audi will get to be rather difficult.

[AZT]

This is only a good move if there is also a price correction. With Tesla also planning a launch, the German 3 will be competing with that as well.

[Theyota]

Do I understand correctly that MB want's to fix end retail price to final customer? I don't know the law about this in India, but in the Western world, this is illegal. Manufacturer can recommend a price, but cannot restrict a retailer at what price the retailer would like to sell it at. It is up to a retailer if he would like to sell a product at a loss.

In my work, I am not even in the sales side of the business. I am a manufacturing guy and I am required to do compliance trainings every year about it. It is given that much of importance.

[Axe77]

Originally Posted by Theyota

Manufacturer can recommend a price, but cannot restrict a retailer at what price the retailer would like to sell it at. It is up to a retailer if he would like to sell a product at a loss.
.

Key difference in the above from what I have taken away.

In this case it is MB India itself which is the retailer / seller. The dealer is effectively just an agent of the seller (MB India) since the inventory is held by MB India and its a direct to customer sales model.

[himanshugoswami]

I see one of two things happening:

Either BMW, Volvo and even Audi will send a thank you card to Mercedes management this Christmas,

OR

These three will also jump on the (arrogance) bandwagon and adopt this model (cartelisation, anyone?).

If the latter happens, the fallout will most likely be a shrinking of the luxury car market in India, and all these players will lose to the point they will be forced to get off their high horses.

A significant part of luxury car sales come from first time entrants into this segment. I too was contemplating picking up a "luxury" suv this Diwali, on the assumption that a good 8-10 lakh off the sticker price will make it within reach. But if the car makers stick to the new MB model, then I will forgo the idea of buying a luxury SUV. I am sure there will be many like me.

It will be interesting to see who blinks first here.