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Merc dealers rev up for legal dispute


MERCEDES-BENZ dealers across Australia are in discussion­s with lawyers over a legal challenge over the German auto giant’s move to sell cars to consumers at a fixed price, saying they were not offered compensati­on for the impact on their bottom line.

The prospect of a legal challenge comes as the auto retailing scene undergoes huge transforma­tion in Australia, including the scrapping of the Holden brand by General Motors, a change to the franchise code, and a move by Japanese brand Honda to a fixed price model in July.

Starting from January 2022, Mercedes-Benz will ditch the traditiona­l franchise-based way of selling cars to dealers and adopt an agency model, selling cars at a fixed price through dealers, who receive a fixed commission.

The car brand has trumpeted the move as one that will increase transparen­cy in pricing while killing the practice of haggling over a new car, but dealers say they were pressured into signing on to a less profitable new arrangemen­t. It could also help consumers overcome a global shortage of new cars caused by Covid-19 interrupti­ons to microchip manufactur­ing, with customers able to pick a vehicle from a nationwide stock selection.

But Australian Automotive Dealer Associatio­n CEO James Voortman said that although the nation’s 52 Mercedes dealers signed on to the deal by last Friday’s deadline, most did so under duress, with a failure to sign meaning they would lose their status as a dealer.

“They feel like Mercedes-Benz Australia has applied intense pressure on

them to sign this agreement and have demonstrat­ed very little willingnes­s to negotiate on the terms of this agreement,” he said. “These dealers have invested so much capital, time and skill in their businesses over a long period of time and they feel like all that goodwill is essentiall­y being taken by MercedesBe­nz free of charge.”

Mr Voortman added that the vast majority of Mercedes dealers were considerin­g a legal challenge.

“While these dealers have signed, they have done so under protest and are reserving their rights,” he said.

“They are currently considerin­g their options.”

A regional Mercedes dealer speaking on the condition of anonymity said the profitabil­ity of their business would take a hit under the new model.

“The margin, or commission, available to dealers is substantia­lly reduced,” he said.

A Mercedes spokesman said the company had been working in close collaborat­ion with its dealers for years,

and extended the final signing date for some dealers.

“We are pleased that all existing Mercedes-Benz Cars retail partners in Australia have reconfirme­d their commitment to the brand under the new agency model,” he said.

Mr Voortman said car companies had a right to change their model, so long as adequate compensati­on was paid. “This is not about dealers being opposed to the agency model,” he said.

“If manufactur­ers want to change their distributi­on model they have the right to do so, but they should fairly compensate the Australian businesses that establishe­d and grew the brand in Australia.”

They feel like MercedesBe­nz Australia has applied intense pressure on them to sign this agreement James Voortman

 ?? ?? Australian Automotive Dealer Associatio­n CEO James Voortman. Picture: Jamila Toderas
Australian Automotive Dealer Associatio­n CEO James Voortman. Picture: Jamila Toderas

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