Mercedes Benz UK bans dealer haggling!
Discussion
MikeDB1 said:
SpeckledJim said:
MB. There isn’t a dealer. Have you read any of the thread?
There isn’t a dealer. No dealer.
Dealer: none.
Okay, whatever you want to call the representative who I actually meet in a showroom to show me the car. I agree dealer might not be the correct term if the contract is with MB. But if I buy a financial product from say Aviva, I pay Aviva for the product but always get a cashback from the financial salesman who I actually met out of the cheque Aviva send him for his services. Same with insurance where I always get cashback from the broker.There isn’t a dealer. No dealer.
Dealer: none.
I don't see any difference with cars ... or washing machines or any other product in fact. There's always a deal to be had.
MikeDB1 said:
Okay, whatever you want to call the representative who I actually meet in a showroom to show me the car. I agree dealer might not be the correct term if the contract is with MB. But if I buy a financial product from say Aviva, I pay Aviva for the product but always get a cashback from the financial salesman who I actually met out of the cheque Aviva send him for his services. Same with insurance where I always get cashback from the broker.
I don't see any difference with cars ... or washing machines or any other product in fact. There's always a deal to be had.
MB call them sales agents. The people in their showrooms that you think you're going to be negotiating with. I don't see any difference with cars ... or washing machines or any other product in fact. There's always a deal to be had.
In case you are not familiar with automotive agency models like MB is shifting to, here is a useful article
"In principle, under the agency model the carmaker takes over full ownership of the information, pricing, and contracting parts of the value chain.
These parts will largely take place in an online environment.
The ‘agent’ (previously dealer) maintains a physical environment for customer interaction, consults the buyer in the process, offers test drives, and deals with handover logistics.
Only with a very clear differentiation around these roles can a truly seamless, haggle-free customer journey be established."
Source: https://autovista24.autovistagroup.com/news/risks-...
Chris Stott said:
So, instead of the poor negotiators getting stiffed by a dealer, every single customer gets stiffed by the manufacturer... Everyone ends up at the price level of those that can't/don't want to negotiate. This change is simply moving every customer to the highest price point in the market.
This sums it up for me.The wider issue that is perhaps being overlooked here is that all car manufacturers are positioning themselves as 'digitally connected mobility providers'.
Put simply: they want you to be their direct customer because of Big Data.
The app that you will need to buy and own a car in future wants to engage with you directly, rather than some disparate CRM system of a dealer group that has outdated interfaces to manufacturers own outdated CRM systems. The car of the future is constantly connected to a central digital hub telling it where it is at all times, what journeys you are doing etc. Your whole lifestyle through car usage and app interactions is pinged back to the manufacturer.
This data, most importantly tied back to you as the manufacturer's customer (as opposed to the dealer's customer) allows them to market to you in a far more targeted way.
Put simply: they want you to be their direct customer because of Big Data.
The app that you will need to buy and own a car in future wants to engage with you directly, rather than some disparate CRM system of a dealer group that has outdated interfaces to manufacturers own outdated CRM systems. The car of the future is constantly connected to a central digital hub telling it where it is at all times, what journeys you are doing etc. Your whole lifestyle through car usage and app interactions is pinged back to the manufacturer.
This data, most importantly tied back to you as the manufacturer's customer (as opposed to the dealer's customer) allows them to market to you in a far more targeted way.
PurpleTurtle said:
The wider issue that is perhaps being overlooked here is that all car manufacturers are positioning themselves as 'digitally connected mobility providers'.
Put simply: they want you to be their direct customer because of Big Data.
The app that you will need to buy and own a car in future wants to engage with you directly, rather than some disparate CRM system of a dealer group that has outdated interfaces to manufacturers own outdated CRM systems. The car of the future is constantly connected to a central digital hub telling it where it is at all times, what journeys you are doing etc. Your whole lifestyle through car usage and app interactions is pinged back to the manufacturer.
This data, most importantly tied back to you as the manufacturer's customer (as opposed to the dealer's customer) allows them to market to you in a far more targeted way.
I'm sure where it's heading is cars on monthly subscription, like your iPhone etc. Everyone wants monthly recurring revenue.Put simply: they want you to be their direct customer because of Big Data.
The app that you will need to buy and own a car in future wants to engage with you directly, rather than some disparate CRM system of a dealer group that has outdated interfaces to manufacturers own outdated CRM systems. The car of the future is constantly connected to a central digital hub telling it where it is at all times, what journeys you are doing etc. Your whole lifestyle through car usage and app interactions is pinged back to the manufacturer.
This data, most importantly tied back to you as the manufacturer's customer (as opposed to the dealer's customer) allows them to market to you in a far more targeted way.
But there's going to have to be some effective way of dealing with cars that come off subscription - it's not going to be easy to just dump increasingly complex used cars on the market while at the same time trying to sign people up to subscriptions for new ones. And if used cars don't retain a significant amount of value then the subscription charges for new won't be attractive.
Mark V GTD said:
Chris Stott said:
So, instead of the poor negotiators getting stiffed by a dealer, every single customer gets stiffed by the manufacturer... Everyone ends up at the price level of those that can't/don't want to negotiate. This change is simply moving every customer to the highest price point in the market.
This sums it up for me.If they ask too much they won't sell enough.
Whether you're buying a car from Mercedes or from a Mercedes dealer, supply and demand still applies.
And if in this dark new future Mercedes is no longer ramming as many cars as they can into the top of the funnel, then even if your cost of entry does go up, your overall cost of ownership (which is all that really matters) may go down.
raspy said:
Interesting article, thanks. I think the problem here is that I suspect the large groups such as RRG are going to push back hard as I can't see how they are not going to lose both margins and top staff.This model was tried in mobile phone contracts of course where Vodafone et al set fixed price airtime contracts, only for large providers to get regulators to force Vodafone to sell them airtime in bulk then resell it at below the prices Vodafone charged. For a foreign OEM vs a UK large company, which do you think the various governmental agencies will side with ?
For now I suppose it's just a case of watch this space.
And maybe have a reason to support Red Bull at last :-)
Mark V GTD said:
Chris Stott said:
So, instead of the poor negotiators getting stiffed by a dealer, every single customer gets stiffed by the manufacturer... Everyone ends up at the price level of those that can't/don't want to negotiate. This change is simply moving every customer to the highest price point in the market.
This sums it up for me.SpeckledJim said:
Well it seems to ignore basic market principles for me. Mercedes can't set a price without permission from the market.
If they ask too much they won't sell enough.
Whether you're buying a car from Mercedes or from a Mercedes dealer, supply and demand still applies.
And if in this dark new future Mercedes is no longer ramming as many cars as they can into the top of the funnel, then even if your cost of entry does go up, your overall cost of ownership (which is all that really matters) may go down.
Much more tech in their new cars, much more luxury and moving prices WILL be going up -->If they ask too much they won't sell enough.
Whether you're buying a car from Mercedes or from a Mercedes dealer, supply and demand still applies.
And if in this dark new future Mercedes is no longer ramming as many cars as they can into the top of the funnel, then even if your cost of entry does go up, your overall cost of ownership (which is all that really matters) may go down.
"The plan within Mercedes, the audience was told, was to push that selling price up even more. 'We’re not going to compete with volume makers,' said CEO Ola Källenius. 'We’re a modern luxury company.'
The message to the bankers was: tell your customers to buy our shares, because profits are only going to go north. The message to Mercedes customers was interpreted as: don’t expect any more cheap or discounted cars.
Like many car makers, Mercedes has been banging the drum of value over volume for a while now, and the executive team used the Monaco event to sketch out what that will mean for the German brand.
By 2026, it predicts that its share of ‘entry’ premium cars in the A-Class category will fall by around a quarter to settle at an estimated 500,000, while top-end luxury cars such as those from Mercedes-AMG, the Mercedes G-Class, Mercedes-Maybachs and the priciest EQ electric cars will increase their shares by 60% versus competitors. The share of 'core luxury' comprising cars like the C-Class and E-Class will be broadly similar.
Illustrating just how much money it’s prepared to spend to focus on top-end models, Mercedes said it will apportion 75% of R&D spend to top and core, with just 25% going to entry.
'The entry point to the Mercedes brand in the future will be a different one than today,' Källenius expressed."
Source: https://brandingforum.org/featured/mercedes-will-b...
PurpleTurtle said:
The wider issue that is perhaps being overlooked here is that all car manufacturers are positioning themselves as 'digitally connected mobility providers'.
Put simply: they want you to be their direct customer because of Big Data.
The car of the future is constantly connected to a central digital hub telling it where it is at all times, what journeys you are doing etc. Your whole lifestyle through car usage and app interactions is pinged back to the manufacturer.
This data, most importantly tied back to you as the manufacturer's customer (as opposed to the dealer's customer) allows them to market to you in a far more targeted way.
It's been happening for a while now.Put simply: they want you to be their direct customer because of Big Data.
The car of the future is constantly connected to a central digital hub telling it where it is at all times, what journeys you are doing etc. Your whole lifestyle through car usage and app interactions is pinged back to the manufacturer.
This data, most importantly tied back to you as the manufacturer's customer (as opposed to the dealer's customer) allows them to market to you in a far more targeted way.
https://www.washingtonpost.com/technology/2019/12/...
https://www.autocar.co.uk/car-news/business/audi-b...
https://www.computerworld.com/article/2694703/once...
I suspect one car firm, probably Chinese, will produce a simplified, scrape through all the regulations and no more, petrol only car at a sensible entry level price, then supply huge numbers to any willing dealers left out by this move to direct sales. At first people will be wary, but if you look at how Hyundai has gone from appalling to the best car on TG last night (agreed not the best of tests but never mind) quite possible the Chinese could do the same. A bit like they have done in low end phones of course which do 85% of an iPhone or Samsung for 25% of the cost.
With many others getting out of low-end, even Ford, then the market could be pretty clear for them.
The only thing in the way is the new petrol car sales bans coming up, but they could pre-register all the cars and have dealers sell them 'second-hand - delivery mileage only' or something.
I'd also love to know where all these new high-end customers for Mercedes (or anyone else) are coming from. For me they are a supplier of taxis.
With many others getting out of low-end, even Ford, then the market could be pretty clear for them.
The only thing in the way is the new petrol car sales bans coming up, but they could pre-register all the cars and have dealers sell them 'second-hand - delivery mileage only' or something.
I'd also love to know where all these new high-end customers for Mercedes (or anyone else) are coming from. For me they are a supplier of taxis.
MikeDB1 said:
I suspect one car firm, probably Chinese, will produce a simplified, scrape through all the regulations and no more, petrol only car at a sensible entry level price, then supply huge numbers to any willing dealers left out by this move to direct sales. At first people will be wary, but if you look at how Hyundai has gone from appalling to the best car on TG last night (agreed not the best of tests but never mind) quite possible the Chinese could do the same. A bit like they have done in low end phones of course which do 85% of an iPhone or Samsung for 25% of the cost.
With many others getting out of low-end, even Ford, then the market could be pretty clear for them.
The only thing in the way is the new petrol car sales bans coming up, but they could pre-register all the cars and have dealers sell them 'second-hand - delivery mileage only' or something.
I'd also love to know where all these new high-end customers for Mercedes (or anyone else) are coming from. For me they are a supplier of taxis.
Primarily China and the USA, in answer to your last question. Those are the growth markets for luxury products in general. With many others getting out of low-end, even Ford, then the market could be pretty clear for them.
The only thing in the way is the new petrol car sales bans coming up, but they could pre-register all the cars and have dealers sell them 'second-hand - delivery mileage only' or something.
I'd also love to know where all these new high-end customers for Mercedes (or anyone else) are coming from. For me they are a supplier of taxis.
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