Mercedes sales plummet to 10-year low after eliminating dealer network
Australian Mercedes-Benz sales have fallen to their lowest level in a decade, after the price-fixing agency model switch. According to them, it's not their fault...
Mercedes-Benz sales have fallen to their lowest level in a decade,in Australia, following the company’s crazy-brave (some would say ‘functionally insane’) switch to the price-fixing agency model.
They did that on January 1, and predictably, the company says the recent implosion of its sales is absolutely not their fault. They’re just following orders.
Imagine being a sales manager for Mercedes-Benz Australia. Every senior executive decision needs a scapegoat - so someone will have certainly copped a blasting from upper management; those unpleasant weekly catch-ups with the boss.
According to official industry sales figures from the sheltered workshop of Federal Chamber of Automotive Industries chief apologist, Tony Weber, Mercedes’ Australian sales fell a staggering 56 per cent in February. That was in a market that staggered in a vaguely positive direction by 1.6 per cent, compared with February 2021.
That sound you can probably hear is not small arms fire in Kiev, it’s the popping of Champagne corks at BMW Australia head office, just around the corner in Mulgrave.
They’re neighbours. You can walk from BMW’s local base of operations to the Benz Australia lair in about 15 minutes. (Except if you’re a mainstream motoring journalist. No walking.)
The BMW Australia outpost out-sold Mercedes locally by near-enough to 60 per cent last month. BMW is poised within about 16 cars of overtaking them. There’s nothing, as I understand, that BMW loves more than blowing Mercedes into the weeds, commercially.
The only thing making Mercedes-Benz look better than shabby, circumstantially, in Australia, is poor old Audi. The premium sub-brand of Wolfsburg’s Criminal Conspiracy brand, Volkswagen, is not looking particularly healthy in 2022. Don’t shoot the messenger, either, they plead guilty. It was a felony. They’re called ‘facts’.
Anyway, Volkswagen’s four-ringed Audi IQ test, where they put four holes in the front of a Golf and hope the rich fall for it, their sales collapsed, again. In February, Audi Australia sales were ‘only’ down by 42 per cent. A small mercy perhaps, for those who shopped elsewhere.
Mercedes-Benz is, of course, determined not to take the blame for this sales implosion flowing from severing its dealers and consequently being sued, hilariously, for $160 million by 40 of those disgruntled former dealers for allegedly inadequate compensation during the part in the exchange where (allegedly) Mercedes Australia crushed the dealers’ goodwill without once lifting a cheque book. They’re heartless like that, allegedly.
Cue the scapegoats:
It’s embarrassing seeing a grown corporation make excuses for the condition commonly known as ‘Sales Dysfunction’. It can happen to anyone.
It’s a treatable condition, too. You just go back in time, resurrect the dealer network, and convince your future self to stop ramping up the prices under the table. And perhaps bullshit just a little less.
Sales would be hard as a rock in no time. You’re welcome.
Semiconductor shortages are a thing, sure, but the whole industry is affected by those, and the situation has more or less stabilised over the past 12 months. Evidence can be found in the market as a whole which is pretty flat at only 1.6 per cent up (compared with last year, and BMW Australia are less than three per cent off the pace. And they’re all pressing on with the same semiconductor problems, more or less.
Surely Mercedes is not seriously suggesting that BMW has some secret semiconductor stash that Daimler lacks. Surely.
There has to be a better excuse than that.
No. Nice try, but no. I’m surprised they didn’t also blame the war in Ukraine.
According to ‘facts’, you don’t need ‘hundreds of cars’ to get back to 2021’s pace - you need much more than that. In fact, you need 1697 additional units to compensate for the year-to-date deficit; that’s about half a ship-load. Plus, you need to sell another 2876 cars just to break even in March. That’s this month.
Good luck with that.
Furthermore, blaming logistics. All car companies are importers, so you’re all subjected to the same logistics challenges, more or less equally. Unless Daimler is especially poor at shipping to Australia, in the way BMW appears not to be.
And ‘quarantine’? Really? How is Mercedes-Benz Australia any more or less a victim of border control processes, compared with every other carmaker? That’s gotta be bullshit, in my view. Everybody else seems to be doing okay, relatively speaking.
In any case, quarantine is a Federal Government responsibility, and the minister for hypocrisy and lies (according to the deputy PM), he wouldn’t see any need to stop a supertanker full of ebola or the next strain of zombie virus, let alone a bunch of Mercs. And defence munster Dutto is a bit busy trying to pick a fight with China to care.
What these corporate bullshitters just don’t seem to get is this:
Take the GLE 300 d, Mercedes’s quintessential ‘value’ family bus. It’s so big it comes with its own postcode. Before on-road costs in 2020, the big bad base model was $105,000. That was for the facelift released in February two years ago.
Fast-forward to today. It’s almost $116,000 for the same base model. That’s a rise of 10.5 per cent. Shit price promise strikes again, nothing to see here, blame it on the pandemic and semiconductor logistics.
People, it seems, are simply buying other cars in 2022 after two years in financial, vocational, medical, emotional purgatory. If you’re one of them, here are the biggest mistakes you’re likely to make buying a new car in 2022 >> Also, you’re welcome.
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The Dark Art of the Dealer
The Mercedes-Benz Australia website will happily reassure you, the consumer, that there’s nothing to see here when it comes to losing the ability to negotiate a better price at a dealership:
That’s on Mercedes-Benz’s Australian website today. What a dubious relationship with the truth. Clearly all respect there has been lost.
The fact is, if you buy a Mercedes in Australia today, you will pay an inflated price that is higher than even the worst negotiator in the nation would have paid in 2020. Because the ulterior motive here, behind the rhetoric, behind slashing the dealers and moving to the price-fixing ‘agency’ loophole model, was to eliminate all negotiation, to slash dealer margins, to go full anti-discounting.
Honda tried it - is still trying it - and its sales have imploded too. Honda Australia’s price-fixing tantrum also attempted to blame the pandemic, dog ate my homework, etc.
But, like Benz, Honda sales are tanking way faster than the rest of the market. I (don’t need to) wonder why. Just look at how much Honda Australia wants for the new Civic.
It seems the iconic, hallowed Mercedes-Benz is not as impervious to commercial absurdity as boardroom insiders at Mulgrave had hoped. I do hope they don’t lose the vehicle supply contract to Hades, however. That’d be disappointing.
What’s really interesting about this is: the market (that’s you, the consumer) appears to be proving itself to be insufficiently stupid to swallow Mercedes-Benz’s outpouring of excuses on this occasion.
For at least some well-heeled car buyers in 2022, pretty clearly, the Mercedes-Benz of their dreams is going to be a BMW. Or a Kia. Maybe a Mazda. Could be a Hyundai, even a Lexus - there’s a thought.
Mazda3 should make you reconsider that heavy, impractical SUV or the long list of overpriced prestige German cars. If you’re money smart, you’ll put this sensible, stylish small hatch or sedan on your shortlist for a test drive.