Mercedes-Benz to switch to agency model in German market

Following the launch of their direct sales model in the UK market, Mercedes intends to further roll out the ‘agency’ model in 2023 in its home market of Germany.

On the Mercedes-Benz Group 2022 annual results conference and earnings call, chief executive Ola Kallenius said, “You turn yourself from a wholesaler to a retailer. It changes your whole attitude to how you run your business.”

Mercedes tested the agency model in pilot projects in Austria, Sweden and South Africa and switched to the new system in the UK in January 2023. The third biggest European market, Germany, will follow later this year along with further overseas markets.

Kallenius sees the direct sales model as a “move away from selling the price to selling the product,” taking away the anxiety from the customer and giving them confidence that they are getting a car for the best price. That dynamic has led to higher customer satisfaction and more price stability according to Kallenius. Moving into direct sales is one of the levers to deal with the increase in variable costs caused by EV drive trains.

While the agency model provides more customer focus with a customer relationship that is one-to-one with the manufacturer, Kallenius and Mercedes finance head Harald Wilhelm said the move to a direct sales model would help to further support their profit targets by reducing distribution costs and providing a foundation for increasing average selling prices.

“The switchover to a direct sales model should be a good enabler of managing discounts moving forward,” Wilhelm said. “In those markets where we have already switched, it has proved very beneficial in this respect and has gone beyond our initial expectations.”