Mumbai: Mercedes Benz has developed a new retail business model that states that the country’s largest luxury car maker will offer its customers a profit of Rs 10,000 to 20,000 at selling prices.
The country’s largest luxury car maker has invested Rs 170 billion to implement a new model called the “Retail of the Future” from October 1st. The model has already won $ 110 million, or about Rs 85 billion in purchase orders. In less than a month, more than 1,700 cars were sold in a festive purchase.
In this model, Mercedes Benz sells cars directly to buyers, ensures transparent pricing and best deals, manages all inventories, reduces dealer interest burden, incidental from the system or Remove the fee.
According to the company, the new model increases overall operational flexibility and benefits all stakeholders. It guarantees a better cost structure and profitable business for dealers, transparent pricing for customers, and a closer connection between consumers and the company.
Martin Schwenk, MD of Mercedes-Benz Twindia, said:
Benefits to profitability for both dealers and companies, consumers get fair dealsMartin Schwenk, MD, Mercedes Benz Twindia.
The new model protects dealers from the risks faced by the market and enables companies to respond quickly and proactively in a dynamic business environment, he told ET.
“By implementing a transparent system, the entire value chain from the factory to the dealer can improve the customer experience and help retain customers,” he said.
Santosh Ayer, director and vice president of sales and marketing at Mercedes-Benz India, said this is a paradigm shift in the way car retailing is done in India.
“It is mutually beneficial for everyone,” he insisted. “The new settings make it easy to reduce the dealer’s cost structure by 15-20% and (and) give customers a uniform and fair price.”
The new settings can easily reduce the dealer’s cost structure by 15-20% and (and) give customers a uniform and fair price.Martin Schwenk, MD, Mercedes Benz Twindia.
Over the years, the cost of inventory transportation and discounts has had a significant impact on the feasibility of dealer operations, with some dealers closing their stores. With the new setup, Mercedes-Benz promises useful operations for dealers from day one. The company has invested Rs 6 billion in implementing this business model.
So how does it work?
With the new system, potential customers will receive a final quote, including general discounts for any model on the company’s portal. The cost of inventory to own a car is borne by the car manufacturer, so dealers are committed to increasing the customer experience and sales.
The capital injected earlier this year will help Mercedes-Benz fund its inventories. For future growth, S-class manufacturers will be able to borrow from the market at a much better funding rate than dealer partners have been able to do in the past, officials said.
In traditional retail systems, dealers pay automakers the full amount of vehicles parked in depots, primarily through inventory financing at high interest rates. This gives dealers greater responsibility for higher working capital requirements, higher fixed cost structures, and fluctuations in interest rate fluctuations.
Traditional dealers typically work with a gross profit of 5-6%, but due to the high cost of inventory and discounts, they often have a negative margin of 1-3%. To regain the negative margins of car sales, dealers from service at a much higher cost, especially from labor costs and loading fees such as depots and handling fees, incidental costs at the time of registration, and the sale of insurance that is rarely offered. The value at the time of damage that tries to recover.
The Mercedes retail model removes dealer inventory costs and discount-related costs, thus increasing the likelihood of a positive gross profit. Because quotes are generated directly by the customer from the company portal, pricing is transparent and discounts are automatically generated based on the customer’s profile, or in the case of repeat sales, there is room for the customer to feel fooled. Is almost nonexistent. Or upgrade sale.
Mercedes-Benz Generates $ 100 Million Orders In October Under New Retail Model, Auto News, ET Auto
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