[JLohchab]

I personally do not see this as a new thought, and I am sure many a OEM's must have fiddled with the idea. Essentially Tesla has also proven to some extent the success of its Direct to Customer sales model, but being electric has its own advantages in the kind of lesser maintenance or wear tear it goes through. Also it being a very unique proposition with respect to what is available in market.

The dealer model has been a successful part of the ecosystem because its a necessity keeping in mind the huge service setup expenses which OEM has to divide over a larger base of franchisees. Hence its unavoidable for ICE vehicles at least.

For sales, the dealer has to invest in infrastructure, manpower and working capital. This drives the basic nature or aggressive approach of a dealer in market. If the cost of WC is removed as mentioned my MB, it becomes a very ideal model for a dealership as it saves on huge balance sheets, bank interests as well as funding challenges because of high current assets and associated liabilities. For a extreme view if I may take, dealer becomes very light footed in many ways, which normally used to drive the long term or rather generational commitment to a brand or business. So in a nutshell, the full time involvement due to escalated commitment to business in terms of funds involved might evolve into only a factor of how good the product is and service revenues associated. For luxury vehicles, still its doable as volumes are low, no. of dealerships is also small to monitor and appropriately control and most of all, the buyers are mostly matured in purchase experience.

Though one thing which supersedes all in my eyes is the model suggested by MB also brings to fore the importance of making a super product all the time. Just like say a mobile phone, it has to have the best specs, look great and perform well to drive positive word of mouth or in these days digital word.

So essentially, in an ideal world I feel customers win as OEM focusses even more to differentiate their product well as to compensate any lesser drive from dealer end in terms of forfeiting part of their margins etc. Dealerships also win as they save costs and can be better managed. OEMs have to tread with caution considering ALL OEMs won't make this shift together and hence short term market share becomes a challenge and any ways AUTO Sector is on its toes for almost a decade now, so who has the courage to test different waters. Peace.

[kartikv1]

When i was buying my 330i Sport from BMW dealer, the salesman did mention a similar fixed price model to be adopted by BMW where there would be no dealer level discounts. I don't think they adopted it at that point but now that Mercedes has brought in such a policy - don't think BMW is far behind this bandwagon. I'm happy i bought my 330i sport at a ripe time - do not foresee the luxury market being anywhere similar to those days in the future

[adi58]

I think this is a very good move by MB. And I hope others follow the same model too. This will eliminate booking fraud/scams. Also retain the badge and resale value. When someone spends upwards of 50L they obviously want the exclusivity. And when the dealers start their discounts rally, that totally kills the purpose. Big thumbs up from me

[pk1972]

I think its a great model and we should appreciate MB for trying this out in the India market. Couple things could happen -

1. I don't think MB will do any price corrections and will achieve it through introducing variants / trims. Most of their models available today are the highest trim levels and MB will introduce lower trims with good amount of kit and sell at lower prices.

2. Time to time there will be sale (End of Year, Festival season etc.) run my MB with standard discounts across so customers have an idea of price & offer before they walk into the showrooms as opposed to the negotiating tactics currently one has to do with dealers.

3. Will ultimately pave way for customizing features - same car being offered at different price points based on feature packs customer chooses.

All in all, I think this is a great move by MB.

[ruchiragrawal]

I would love to see how BMW, Audi, Volvo react to this. They could be absolute bosses, and stick to the conventional selling model, and undercut MB severely. For the most part, people are not brand loyal (except for high-performance cars). The new X7 is a better car than the new GLS. The new M340i is a better enthusiast's car than the A35 sedan. For the most part, BMW has a better fleet overall than MB (except for the S-class probably). People who are opting for luxury cars for the first time seldom do it for the performance; they would usually be much happy getting the most of the money they're spending.

As a person who is comfortable negotiating, and is usually successful in doing so, I would hate to be given a 'one price only Sir' reply when buying. And I personally know very good MB dealers who go out of the way to give good discounts to repeat customers.

I would personally hate to see dealers taking a loss on this.

[84.monsoon]

I think this may go well for newly launched cars. But for models long in the tooth waiting for refreshes or next generations to come, this approach will be disastrous. Competition will probably already have a fresher car in the segment. The big-3 Germans generally follow a model refresh cycle at least in India within the same segment that is off-set from each other by a year or two - With BMW being the fastest to launch a global new model or update in India, Mercedes next and Audi 2-3 years later.

Imagine trying to sell a BMW X1 now (a full 5 years since launch) at full list price, or with only a small published discount pan-India, and NO dealer negotiations, when the Mercedes has just launched the brand new GLA! If I were in the market I would not buy an X1 unless I got a 7-10 lakhs discount. If such massive discounts are advertised broadly pan-India, the brand would lose all credibility! It is one thing to have one customer make a private negotiated deep discount deal with one dealer, it can easily be denied by another dealer or the company as rumor - entirely another thing when it is all out in the open.

[Venkatesh]

Mercedes-Benz has adopted a direct-to-customer sales model. Mercedes-Benz India MD and CEO Martin Schwenk talks about the reasons behind this move, the role of the dealer, impact on discounts and more.

https://youtu.be/GBe0mv1_-6A

[Sahil]

From what I have understood from a dealer/principal, the discounts will continue however will be standard across dealers. Billing will be done directly from MBIL so dealers don't have much control over negotiations.

This is inline with the press note and interviews that MBIL is putting out. However, discounts are not flat across a first time Mercedes buyer and repeat/corporate customers who have and continue to buy multiple units. Here lies the catch that I am not very clear on whether it will actually be one price for all? Dealers will have a say in which "category" a customer falls in and thus what discount he will be offered by MBIL. Even currently, this system prevails and often the way to get a good deal is when the dealer put you into a higher discount bracket profile.

I guess only time will tell how things pan out for MBIL. BMW and Audi have a golden moment to discount heavy and drive in customers while MBIL figures/fine tunes its new strategy.

[parekhakshar]

I remember when I was in the market for buying E Class, two dealers were trying to push very hard and that made the negotiation process very exciting along with HUGE discounts. If I'm spending >50L for a car, discounts are also on the priority list. We can surely take examples of brand like LV but every segment is different. Merc is a great brand but it is not LV of automobile sector. If I'm in market for >50L vehicle my decision can change based on price but if I'm in market for Rolls Royce then I'd never care about pricing(Surely I'd try hard to negotiate) because I don't have much options at that price point. So I guess this concept is not going to work for this segment atleast. But I'm also afraid if BMW/Audi follows the suit then it'll be very tough for consumers to buy HIGHLY OVERPRICED luxury cars.

[sampadroy]

Audi IN says "GAME ON!!"...
Maybe Audi's response to MBIL's ROTF Sales Model.

Definitely an interesting read and good to see the Old German having a clear vision for India when MBIL is up to something completely different .

The article does highlight a few very good points which have been put forward by Balbir Singh Dhillon, Head of Audi India.

Source: https://www.thehindubusinessline.com...le34806037.ece
-----------------------------------------------------------------------------------------------------------------------------

The Article:

Audi plans to boost production in India

This is to avoid paying very high duty, says the head of German automaker in India.
In a bid to make its cars more affordable, German auto major Audi plans to scale up manufacturing in the country. Currently, Audi manufactures only two of its models – the Audi A4 sedan and Audi A6 sedan – in India. According to Balbir Singh Dhillon, Head of Audi India, the carmaker plans to ramp this up to achieve local manufacturing of 80-85 per cent of the cars sold in India.

“Most of the cars that we will be selling in India will be made locally, otherwise, we end up paying very high duty,” Dhillon told BusinessLine.

The luxury automobile sector has seen stagnation in growth for almost a decade, accounting for just over 1 per cent of the overall market. Luxury car brands have blamed the stringent import duties as a cause of demand suppression.

“All our customers are well connected, very well travelled all across the world, they know what luxury is, the know the price of these cars outside of India. Therefore, it becomes extremely challenging for us to convince these customers to pay two times, 2.5 times the price that they would have gotten abroad. So, this is one of the biggest challenges we face. Even if we look at South-East Asia markets, the luxury segment revolves around 5-8 per cent,” said Dhillon.

However, with a young and burgeoning middle-class and upper-middle class that is aspirational and double-earning, Dhillon remains convinced that in the middle to long term the Indian market for luxury cars is likely to grow.

“A one per cent market share also indicates that India has a lot of growth potential, once these duties are lifted the volumes will grow exponentially as well. The immediate plans for Audi is not just to drive up volumes, but to keep investing in India, bringing new products to keep customers engaged. Audi believes in India’s story” said Dhillon.

Affordability
Audi has been trying to make its products affordable with the launch of Audi Q2 last year for entry-level customers.

“This has been a successful experiment so far. There are many first-time buyers. The average age of the buyers is much younger than what it has been in the first-time luxury space. And we hope we can serve more and more segments and bring in more customers to us.”

[rrsteer]

It is called the agency sales model in management consultant speak. One of the takeaways from Tesla’s direct sales model was that inspite of all the efficiencies, customers still yearned for a personal experience like they get from a dealer even when booking online. OEMs are going to use the agency sales model to combine the benefits of a direct sales model with a standardised, hopefully rich experience at the dealership. Such a model also has some other advantages for an OEM:
1) Rolling out new car ownership models. Imagine how much easier it would for MB to roll out alternate ownership models like car as a service.
2) OEMs now has first hand access to customer data through the customer lifecycle. They are for sure going to mine and apply the data in innovative ways.
3) Omni channel sales model- pay through Amazon, or google pay or any other way you like and collect your car from the desired dealer

Covid will only accelerate this trend as it puts significantly less financial stress on the post manufacturing supply chain.

PS: among the main stream car brands, i feel toyota will be one of the early adopters of this model. I heard from someone that Stellantis is aiming to transition to such a model completely.

[kartavya]

I am totally for this. It sucks to not know the "actual" price of the car before going into the showroom. 2-3L here and there is fine, but most of the times the discounts are much higher. I don't want to test my negotiation skill and feel bad for not getting a deal as good as the next person. A flat discount/price reduction would be very welcome for me all across the segment. Ofcourse this only works if BMW/Audi/Volvo/Jaguar follow this model.

[kiku007]

Originally Posted by kiku007

Honda Australia is going ahead with the fixed-pricing model but they are marginal played and no one really cares.

The prices of most Honda cars have risen under the new arrangement – by between $251 and $977 – and the company has taken the opportunity to axe some of its more affordable models.

Source: https://www.caradvice.com.au/964660/...ia-from-today/


This is why I have my reservations on Automakers offering a good deal with the fixed-price model.

From today, Honda customers will not be able to negotiate on price when buying a new car after a radical overhaul of its traditional business model.

Under the restructure, Honda has reduced the number of dealers nationally from 105 outlets to 90.

Some outlets have separated their showrooms and service centres, while the company will also experiment with “pop up” stores in shopping malls.

The Honda Civic was last year available for as low as $24,990 drive-away; the revised range starts with a better equipped model priced from $31,000 drive-away.

Although the prices are higher than before in most cases, the drive-away deals include metallic paint across all models (rather than selected models), and includes “premium” roadside assistance for the duration of the five-year warranty.

[ajmat]

The madness has started already!

A close friend of mine booked an AMG GLE 53 during end March which was due in May for around Rs 1.43CR on road. One month ago, he got a call stating there would be a 3% hike. He was agreeable to this.

Last week, they called and told him the prices hiked by 25%. Spurred on by the Maybach GLS bookings which were closed in half a day, they felt this price is justified.

I popped over for lunch expecting to see the new AMG GLE - nope, the XC90 is still in its place. My friend has booked a Q8 and got a Rs 10L discount!

[Venkatesh]

Having dispatched its last dealer-billed vehicle only a few days ago, Mercedes-Benz India will start billing cars directly to customers from 22nd October.

Link