In an industry first, Mercedes to sell cars directly to customers in India

German carmaker’s new ‘Retail of the Future’ model aims to eliminate friction, induce better dealer profitability and improve customer experiences.

By Mayank Dhingra calendar 02 Jun 2021 Views icon10942 Views Share - Share to Facebook Share to Twitter Share to LinkedIn Share to Whatsapp

Mercedes-Benz India has announced a new retail strategy for the Indian market. This aims to smoothen the purchase process further, enhance customer experiences and also induce better profitability for its channel partners.

The new approach, part of its ‘Reimagine Excellence’ programme, is similar to a D2C (direct-to-consumer) model, wherein Mercedes-Benz India will directly invoice vehicles to customers, set a standardised national price and hold a centralised vehicle stock to allow channel partners to save on inventory costs. The company intends to implement this ‘Retail of the Future’ business model, by the fourth quarter of the ongoing calendar. 

Dealers will continue to provide the Mercedes-Benz brand experience to customers as well, showcase vehicle portfolio, offer test drives and facilitate sales of new vehicles in terms of the delivery, finance, exchange and insurance processes. 

The centralised stock system and a decentralised nature of the vehicle inventory would enable Mercedes-Benz India to make a direct transfer to a dealer based on customer orders while a sales consultant would also be able to run through the entire stock (at other dealers or at the plant) in order to help customers in getting their desired model, trim and variants.

Mercedes-Benz India, which sold 3,193 units and registered a 34 percent year-on-year uptick in Q1 of CY2021, acknowledged the following three parameters as the key pillars of its new retail game plan – 

  • National set price 
  • Stock to be owned by Mercedes-Benz India 
  • Centralised order management 

While from a customer perspective, the new retail model would offer transparent pricing, standardised offers across the country and also enable higher residual value of the car in the used car market.

For an existing Mercedes-Benz India dealer, it would mean enhanced profitability due to zero inventory costs, reduced risks and liabilities related to customer orders and potential to drive down the high-cost structures of a dealership operations. The luxury carmaker will also bring a star-rating system based on customer reviews, which will be the only differentiator among dealers and push them to be competitive.

According to Martin Schwenk, managing director, Mercedes-Benz India, “With the Retail of the Future strategy, we intend to move from a linear process to a more interconnected retail model for Mercedes-Benz in India. We want to underline that we want to change the business and drive into a sustainable future with a lot of benefit to customers, while supporting our channel partners. A lot of back-end integration is underway to optimise customer support”

“We know it’s a risky enterprise as we are pioneering something that has not been done in India and even overseas at such a large scale,” Schwenk added.

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