New MB pricing

[Bobby Dazzler]

Not really.....until quite recently all car dealerships i knew were a franchise situation where the dealers can sell the cars for what they want and make as little or as much as they want ....which is very different from the agency sales setup.

Yep, the majority of UK main dealerships for almost all car manufacturers have been franchises for some time. The agency model - and direct sales generally - has been talked about by manufacturers and within the industry for many years, but it’s only really started to be acted upon in any meaningful way now.

This is for a variety of reasons, including the impact on dealers. This not out of charity but because the transition takes time, long enough for dealers to vote with their feet, or make repairs, service and handover difficult for the OEM. This is not unique to car sales it affects other industries which make fundamental changes to sales & distribution channels.

Vauxhall did some direct sales online, which was ahead of it’s time, Tesla we’re disruptive with their driver sales channels (and stores rather than dealerships) and now most manufacturers are accelerating plans - some having started, and some having completed (like Lotus).

It would have happened anyway.

 

[Bobby Dazzler]

The bigger shift that’s coming will be new players in the low-cost small/medium new car market, which the established Western OEMs are pulling out of because the price point stretches too far for consumers to bear when complying with legislation.

I believe that the void will be filled with Chinese brands in the short-medium term. They’ll favour agency sales too but could tempt away dealers which are becoming less sustainable with established brands by offering a new franchise.

That will help new Chinese brands to establish a UK footprint quickly for handover, repairs and servicing, make them more visible and ultimately make them feel more traditional/British than new/Chinese, and will switch to agency sales later.

I believe that in the medium-long term we will see the transition to mobility rather than personal car ownership. Again talked about for many years, but only a matter of time as the young are less benefit in learning to drive and buying/running a car.

 

[BTB 500]

Just to resurrect this ... I had an email from my nearest MB dealership today:

From 10-13 November, we have exclusive in-store savings especially for you across our selection of new cars.

How does that fit in with the fixed pricing / no discounting policy??

 

[st13phil]

How does that fit in with the fixed pricing / no discounting policy??

A “great idea” that doesn’t survive contact with reality?

 

[tonysmb]

I note that some dealer groups are allowing people to 'book an appointment' online, which doesn't seem to be quite so 'exclusive' as receiving a 'personal invitation' from the dealer principal

What I find irritating in the spiel is the 'assist you with your journey'. They're selling a car, you're buying one, that's all; it's hardly a 'journey', is it.

I haven't been to my local dealer since they started this 'one-price' policy and having received a sales call advising me that they were now just like my Apple store and it would be the same 'experience'. Having never been into an Apple store (other than a fruit & veg shop), they'd misjudged at least one of their longterm customers.

 

[BTB 500]

AFAIK it's always been standard practice to get rid of (sorry, encourage sales of) outgoing and/or less popular models by discounting them. Bit tricky if your company policy doesn't allow this.

Before the new policy I regularly got invited to 'special events' with (allegedly) reduced prices being offered on new MB cars (despite never having bought one!). This is the first such invite I've received for a year or two though.

 

[kcsun]

Apparently, I am only one of a "handful" (5?) of carefully selected customers who can benefit from the "substantial financial support package". Funny as I paid cash for my SL and cash for my GLE???


kc

 

[BTB 500]

That one is less surprising as it applies to Approved Used cars, which AFAIK weren't affected by the new policy.

FWIW my invitation came from MB Shrewsbury, who are part of the huge Lookers Group:



Maybe they feel they're big enough to ignore MB's new(ish) policy? Or are MB relaxing it?

 

[SamW]

I think the point is any savings for all/certain models are applicable in a uniformed fashion nationally.

Renewal incentive for loyal customers are common place and this is no different. If you’ve got one MB and you’re replacing it, why shouldn’t you get some kind of loyalty over a conquest customer? We all moan when it’s new customers only - they can’t win!

Must admit, I’m a fan of this new car pricing and supply. Transparent, easy, online at your fingertips 24hr a day.
I’m sure we’ve all done the Carwow nonsense and ‘shopped’ around, what a faff. If you want the product, and like the nationwide offer, what’s not to like??!!

 

[Dippo]

I think the point is any savings for all/certain models are applicable in a uniformed fashion nationally.

Renewal incentive for loyal customers are common place and this is no different. If you’ve got one MB and you’re replacing it, why shouldn’t you get some kind of loyalty over a conquest customer? We all moan when it’s new customers only - they can’t win!

Must admit, I’m a fan of this new car pricing and supply. Transparent, easy, online at your fingertips 24hr a day.
I’m sure we’ve all done the Carwow nonsense and ‘shopped’ around, what a faff. If you want the product, and like the nationwide offer, what’s not to like??!!

So you are happy to pay full list price, and not ask for a discount?

 

[SamW]

The fun of the negotiation is short lived imo. If I’m buying something of any value, I make sure I want the product first, ensure the price is fair and inline with the market, then finally enjoy the service given.

If any of these 3 factors go wafty, I don’t buy it.

 

[Fastcar155]

Hi , call it what you like , agency sales , fixed prices , best price etc etc is wrong.

I won't buy a new car without the enjoyment of negotiation , as good as Mercedes are I want a choice.

Time will tell but I bet major car distribution companies don't like the idea agency sales.

 

[Dryce]

The fun of the negotiation is short lived imo. If I’m buying something of any value, I make sure I want the product first, ensure the price is fair and inline with the market, then finally enjoy the service given.

If any of these 3 factors go wafty, I don’t buy it.

Well maybe they should mark up the cars with a prestige exclusive price lists for you.

And use that mark up to discount a bit more to the rest of us .....

You're happy. I'm happy. Win Win.

 

[Dryce]

Hi , call it what you like , agency sales , fixed prices , best price etc etc is wrong.

It's all about supplier pricing control. With finance also provided for PCPs and leases by the supplier and also some control of used prices then they end up with price control (and even manipulation) through the new and used car sales. Price and financing control also means potentially control - or at least influence - over servicing. It's basically surrounding and get complete control over the customer.

 

[Bobby Dazzler]

It's all about supplier pricing control. With finance also provided for PCPs and leases by the supplier and also some control of used prices then they end up with price control (and even manipulation) through the new and used car sales. Price and financing control also means potentially control - or at least influence - over servicing. It's basically surrounding and get complete control over the customer.

How is it complete control of the customer? The supplier is entitled to set the price of the products and services they sell.

 

[st13phil]

How is it complete control of the customer? The supplier is entitled to set the price of the products and services they sell.

My understanding is that it is perfectly legal for a supplier to set a "Recommended Retail Price" (the RRP) for their product, but that the distributors of that product must be free to set their own retail prices under Competition regulations.

I suspect that is what is behind the "agency" model that MBUK have adopted, which looks to me like a cynical mechanism to side-step the competition regulations regarding price.

 

[st13phil]

BTW, here's a good, concise, explanation of the "Agency" model as being adopted by car OEM's (that, incidentally, touches on the issues that arise when supply outstrips demand):

High risks and high rewards of the agency model for new-car sales

The implications of the agency model for new cars and whether the anticipated benefits outweigh the challenges.

autovista24.autovistagroup.com

 

[Bobby Dazzler]

My understanding is that it is perfectly legal for a supplier to set a "Recommended Retail Price" (the RRP) for their product, but that the distributors of that product must be free to set their own retail prices under Competition regulations.

I suspect that is what is behind the "agency" model that MBUK have adopted, which looks to me like a cynical mechanism to side-step the competition regulations regarding price.

I’m not an expert either however, what you describe is when the business which sells the vehicle is independent of the manufacturer and distributor.

With the agency sales model Mercedes sells the car, but the main dealer acts as their agent who is authorised to complete the deal on behalf of Mercedes.

 

[st13phil]

I’m not an expert either however, what you describe is when the business which sells the vehicle is independent of the manufacturer and distributor.

With the agency sales model Mercedes sells the car, but the main dealer acts as their agent who is authorised to complete the deal on behalf of Mercedes.

Exactly.

The distributor is removed from the sales chain, so the consumer is buying directly from the manufacturer who can then fix the price - hence my comment about it looking like a cynical way of avoiding competition regulations around price. The agent (formerly the retail dealer) is simply paid a transaction handling fee by the OEM, and has no opportunity to influence the price the consumer pays.

 

[Bobby Dazzler]

Exactly.

The distributor is removed from the sales chain, so the consumer is buying directly from the manufacturer who can then fix the price - hence my comment about it looking like a cynical way of avoiding competition regulations around price. The agent (formerly the retail dealer) is simply paid a transaction handling fee by the OEM, and has no opportunity to influence the price the consumer pays.

I’m not an expert but my experience of the CMA is such that they will err on the side of suspicion generally, but especially in industries already in their spotlight for suspected anti-competitive behaviours.

Given that pretty much the whole of the motor industry is moving in this direction - and it has been much publicised - if the CMA and their equivalents had concerns then they will have already intervened.

Such large companies in this type of industry - and their lawyers - would be confident in their position before making commitments, and may be one reason that it’s being implemented by territory.