No more dealers, only retail partners - Mercedes-Benz Malaysia adopts agency model

To be clear, the headline above doesn’t mean that familiar names like Cycle & Carriage or Hap Seng Star will cease operations. No, the Mercedes-Benz dealers that you are familiar with will continue operating from their existing premises. The difference is that they will soon be re-designated as Mercedes-Benz retail partners, not dealers.

In a press statement released earlier this evening, Mercedes-Benz Malaysia said its dealers are expected to transition into a new agency sales model in September 2023. It is also the first Mercedes-Benz sales organization in Southeast Asia to do so.

“The new model will empower its customers to a seamless purchasing journey with one best price. Customers will have even more freedom to choose from a national stock, regardless of location or channel. They can conveniently switch between and combine the different contact points, regardless of whether they want to exchange ideas with product experts in its authorized dealership; obtain information and/or conclude the purchase contract online,” said the company.

The company also re-affirmed the roles of its retail partners, “Mercedes-Benz's retail partners will maintain their pivotal role as experts and Brand Ambassadors, offering customers a luxurious experience at their retail network. They will play a crucial part in ensuring a seamless customer journey of omni-channel experience, from the initial research phase to the vehicle handover upon purchase.

“The new agency model offers its retail partners the opportunity to concentrate even more than before on customers and their support. Customers will continue to benefit from a comprehensive range of services at retail, including vehicle sales, flexible financing options, maintenance and repair services, genuine parts availability and warranty support. This convenient accessibility ensures a holistic ownership experience for customers.”

What’s the difference between a dealer and a retail partner?

At its simplest and most relatable point to customers, switching from a dealership to an agency model means that there will no longer be any difference in pricing between one Mercedes-Benz outlet and another.

As anyone who’ve bought a new car will know, different dealers of the same brand often give varying discounts and will upsell you different things.

Under the agency model, irrespective of which Mercedes-Benz outlet you go to, all new Mercedes-Benz retail partners will sell the same models with the same non-negotiable price (cars delivered to Sabah and Sarawak will continue to carry additional charges).

This doesn’t mean that Mercedes-Benz won’t offer seasonal discounts or promotions. This will continue but the difference is that the discounts / promotions offered will be the same for all outlets.

In other words, don’t bother shopping between one Mercedes-Benz outlet with another to compare discounts.

Under this unified sales agents format, all Mercedes-Benz retail outlets can focus on providing the best customer service, instead of competing amongst themselves, when they should be competing against rival brands.

Also, under the agency model, customers will have transparent access on stock availability information, so there’s no need to visit different dealers to get the colour or variant that you want in the shortest possible time.

From a business operation perspective, this ‘agency’ model simply means that dealers (now retail partners) will no longer carry stock or purchase new cars from Mercedes-Benz Malaysia. All unsold cars belong to Mercedes-Benz Malaysia, including display and demo cars.

In a traditional dealership model, dealers must make full payment for the cars (no consignment) before a car carrier truck can begin delivery. Dealers will also have to commit to certain targets and be given incentives and commissions.

Under the agency model, retail partners will only serve as facilitators in a very online-centric sales process, and be paid a service fee for each car sold. They don’t need to pay for any new car stock, but with no control over transaction prices, it will be hard for dealers to differentiate themselves from other outlets, and they now have one less tool to close a deal.

The announcement by Mercedes-Benz Malaysia is meant to communicate that the company has reached an agreement with its dealers to transition into sales agents.

Sagree Sardien, CEO & President, Mercedes-Benz Malaysia said “We are excited to share a major milestone in our mission to strengthen customer loyalty for the Mercedes-Benz brand. Through a close partnership with our esteemed retail partners, we will jointly embark in taking the next step towards revolutionizing our sales model. As the first in the region to implement the agency model for the brand, we are confident that this transformative leap will further enhance our brand's presence and deliver an exceptional customer experience. Together, we look forward to an exciting journey in redefining automotive sales in a highly digital & technological era."

Bettina Plangger, Vice President, Sales & Marketing, Mercedes-Benz Malaysia added, “This progress is driven by changes in customer behavior in the digital age. We want to make it as easy as possible for our customers to interact with us. It doesn’t matter if it’s digital or physical. The agency model supports us in seamlessly connecting all contact points.”