Mercedes-Benz India eliminates handling charges with RoTF

by Mayank Dhingra 22 Oct 2021


L-R: Santosh Iyer, Vice-President Sales and Marketing, Mercedes-Benz India; Mohan Mariwala, founder and MD, Auto Hanger India, and Martin Schwenk, MD and CEO, Mercedes-Benz India.

On June 2, 2021, Mercedes-Benz India revealed its disruptive sales strategy for the Indian market – a direct-to-customer-like model – christened Retail of the Future (RoTF).

While the new approach aimed at setting a standardised national price for its cars, holding a centralised stock inventory, and allowing dealers (now franchise partners) to save on inventory costs and freeing up working capital, the company today officially kicked off its new sales dynamic in the Indian market.

India becomes the only CKD operations country and fourth globally after Sweden, Australia and South Africa in the German luxury carmaker’s worldwide presence to have switched to the new retail format that has taken Mercedes-Benz India to spend Rs 60 crore in making the back-end transition and close to two years of work since October 2019.

With the RoTF kicking into action, prospective customers of Mercedes-Benz India will stand to benefit from best-price assurance at any of the company’s franchise outlets across the country, redeem the pre-set monthly discounts, loyalty / corporate offers, and also benefit from zero handling / delivery charges under the new retail format.

In an attempt to enhance transparency, the luxury carmaker has done away with all incidental charges, such as handling / delivery charges up to 100km of the showroom. “It’s a bold step for us to do away with non-transparent / hiddencharges during a new car purchase, with the disruptive RoTF sales model,” said Santosh Iyer, VP, Sales and Marketing, Mercedes-Benz India.

“However, if a customer requests for doorstep delivery of the car over 100km, the flat-bed charges will be levied on actuals,” he mentioned during the company’s press conference.

Although the Supreme Court of India, in April 2012, had issued a nationwide directive discouraging automobile dealers from charging delivery / handling / logistics charges over the ex-showroom price of a vehicle, the dealer malpractice is still common across India to dodge misinformed customers.

Under the new sales dynamic, Mercedes-Benz India will be directly invoicing cars to customers, while still leaving the delivery process for its franchise partners to undertake. As a result, the company has split a new vehicle’s price quotation into two parts – Part A (payable to Mercedes-Benz India) and Part B which includes component of insurance, road tax or any government levies – that needs to be furnished by the franchise partners before delivery.

In order to bill cars directly to customers and offer doorstep delivery even in remote locations, Mercedes-Benz India says it has had to register with 35 local RTOs, registered for GST in 22 states and opened offices in 68 more cities to fulfill legal criteria to execute this revolutionary retail strategy.

“The support, confidence and trust from our franchise partners have enabled us to work in depth on the RoTF business model,” said Martin Schwenk, MD and CEO, Mercedes-Benz India.

Mohan Mariwala, MD, Auto Hangar India – one of the brand’s oldest franchise partners in the country, said, “Mercedes-Benz India has created a win-win situation for us as well as customers with the RoTF. With worries of getting a best price going out of the window, our sales executives will now be able to focus on offering the best car buying experience to customers.”