A new move from Mercedes-Benz is the latest sign that huge auto dealerships are going out of style.
The German automaker plans to trim its dealership footprint by 10% worldwide in the next three years, including by slashing locations in Germany, Automotive News reports. The shift is part of the company’s plan to sell more cars directly to buyers and move more of those transactions online.
Mercedes wants 80 percent of its Europe sales to be direct, cutting out middlemen dealers by 2025. The company is also aiming to make 20 percent of its sales online.
“We are constantly optimizing our worldwide sales network to improve our customer service and expect further consolidation of the locations in the coming years," Mercedes official Bettina Fetzer told Automotive News.
The company’s “agency” direct sales model will see the manufacturer retain ownership of its stock of vehicles in Europe and control of financing and invoicing. Mercedes will continue to work with dealerships to deliver cars to buyers and service vehicles after they are sold.
Mercedes is not the only major auto manufacturer planning to shrink its dealership footprint. Honda is looking to redesign dealerships as essentially pickup locations for online orders and service centers for those cars. Electric luxury vehicle makers like Tesla and Rivian are already showing that direct sales can work.
"We want to have more proximity to the customer and therefore have better control over pricing," Mercedes Chief Financial Officer Harald Wilhelm said in June. "That's why we are moving from the current dealer role."
Online car buying was up 25 percent in 2021, according to Wired. The boost, which was driven by the pandemic, accounted for 9 percent of all online sales.
Defective Car? Know Your Rights
As Mercedes, Honda and other automakers rethink the way they sell cars, they still continue to struggle to ensure that those vehicles are safe to drive.
Mercedes recently announced it is recalling nearly 1 million vehicles that may be riding on shoddy brakes, for example. That announcement followed two other recent recalls.
The company said in March that it was calling back certain 2022 EQS electric vehicles over fire risks posed by faulty connections. The following month, Mercedes said it was recalling more than 8,000 vehicles equipped with defective driver-assistance systems that could increase the risk of a crash.
Fortunately, car owners in California do not need to wait for a recall to get malfunctioning vehicles fixed.
The California lemon law forces car manufacturers to perform a variety of repairs on vehicles while they are under warranty. It also forces them to buy back covered vehicles that they are not able or are unwilling to fix.
Speak with a California Lemon Law Attorney
If you have been stuck with a defective or malfunctioning vehicle, a California lemon law attorney at Bickel Sannipoli APC can help you fight back.