Mercedes-Benz Korea will introduce a direct sales system starting on the 13th. It will end delegated sales through dealers and switch to a model in which the importer directly manages inventory and prices. In the auto industry, some expect Mercedes could struggle in the early stage of implementation because consumers may resist the disappearance of dealer-driven discounts.
According to the imported car industry on the 10th, Mercedes-Benz Korea will implement a new sales method called "Retail of the Future (RoF)" starting on the 13th. Until now, Mercedes-Benz Korea had consigned sales by wholesaling vehicles to dealers and leaving pricing and service decisions to them.
Under the RoF system, Mercedes-Benz Korea will directly manage and sell inventory. Dealers will become a kind of agency that explains vehicles at a uniform national price and handles delivery and after-sales service (AS).
The key is price. Mercedes-Benz Korea says the introduction of direct sales will not raise prices. A Mercedes-Benz Korea official said, "We plan to run promotions in line with market conditions and demand." Vehicles with ample inventory are likely to be discounted. The official emphasized, "As customers receive the same benefits nationwide, price transparency will improve."
However, the imported car industry believes there could effectively be a price increase. An industry official said, "Until now, you could get a bigger discount depending on how much legwork you did, and consumers viewed that as a gain," adding, "Even if Mercedes-Benz Korea offers a blanket discount, consumers will not think they 'bought it cheap' because it is not a discount they secured with extra effort." Another industry official also said, "Unless they are loyal customers, there is a chance they will turn to competing models that offer larger discounts."
If the industry's expectations materialize, sales volumes may also be affected. Mercedes sold 68,467 vehicles last year, ranking second among imported brands after BMW (77,127). Third was Tesla with 59,916. But in the first quarter of this year, Tesla sold 20,964 to take first place, while Mercedes (15,862) ranked third after BMW (19,368).
With Tesla pushing to expand its domestic market share through aggressive discounts, Mercedes, which is adopting direct sales, could drop to third place on an annual basis unless it launches large-scale promotions and new models. A dealer official said, "At least in the first year of the direct sales system, we expect sales to decline," adding, "It will take time for the new system to settle."
Still, some view that once the direct sales system takes hold, it will be advantageous to consumers in the long run. Not only will the burden of having to shop around disappear, but efficiency in vehicle release and delivery is also expected to improve. Previously, inventory status varied by dealer, so even for the same model, the delivery wait time differed depending on which dealer you purchased from. Under direct sales, nationwide inventory is managed in an integrated manner.
Shifts are also expected in competition among the 11 dealers contracted with Mercedes-Benz Korea. Going forward, dealers will earn revenue from fees tied to vehicle delivery rather than per-vehicle sales margins. Although they will still need to deliver many vehicles, with in-house discounts and freebies banned, observers say they will have no choice but to compete on showroom scale and service. This is why Hansung Motor recently released that it will become the first domestic dealer to fully switch its customer center operations to a 24-hour system.
A dealer official said, "If prices are the same nationwide, consumers will choose where to buy based on showroom condition and size, and the level of service," adding, "There is a possibility that the structure will favor large dealers."