MERCEDES DRIVES IN FRANCHISE MODEL, TO SELL CARS DIRECTLY

Luxury car maker Mercedes Benz has introduced a direct-to-customer sales model for the first time in India, as it seeks to better the buying experience, the company said on Wednesday. According to analysts and dealers, it’s a first by any luxury car company in India and will pave the way for more firms toeing the line.

Termed ‘Retail of the Future’ (ROTF), it is a winwin situation for customers, the company, and its franchise partners. Under the new retail models, Mercedes-benz

India will own the entire stock of cars, sell them through appointed franchise partners, invoice the new cars to the customers directly, process the order and fulfil them, offering one transparent price and purchasing experience for customers. The new business model will be applicable for new car sales. Separate business lines, including customer service, pre-owned cars and allied businesses remain unchanged under the new model.

“The ROTF will enhance the buying experience for the customers and help our franchise partners,” said Martin Schwenk, managing director and chief executive officer (CEO), Mercedesbenz India. “We are not changing our footprint. We are just integrating the whole process for the customers,” he said, adding that the new model will help the company leverage its network a lot better. The other two markets where Mercedes has a similar model are Sweden and South Africa.

The luxury car market has been hit hard in the past couple of years. This in turn has hit the dealers hard. A high cost of capital and low sales have forced several of them to shut shops, said Puneet Gupta, associate director, I.H.S Markit, a market research firm. “While customers will benefit from unified pricing and better buying experience, it will be of greater benefit for dealers as it takes off the burden of funding the inventory,” he said. For someone who is buying a Mercedes, it is only when the invoicing is done will the changes be discernible. The invoicing will be done in the name of the company and not the dealer partner, as is the case today. Also, one gets to choose from a wider pool — be it trims or colours. For instance, if a particular variant or colour is not available at a dealership, the centralised warehouse manager can get the car delivery facilitated through some other franchise partner making the buying experience hassle free, explained Schwenk.

It would also offer best prices directly from the company without having to negotiate and lead to easier price comparison, seamless and simplified purchase process, complete transparency, sale and, and save time, and effort, Mercedes claimed.