Mercedes will cut 10% dealership, increase direct sales

Mercedes-Benz plans to shrink its global dealer network in the coming years, with major cuts in the German automaker’s home market.

In an interview with Dr. Automotive News (Subscription required) Released on Monday, Bettina Fetzer, Mercedes’ vice president of communications and marketing, said the cuts for most markets would be completed by 2025. He said the cuts in Germany would last until 2028 and would be between 15 and 20% of dealerships there.

Mercedes has about 1,000 dealerships in Germany covering both the Mercedes and Smart brands, about 6,500 for the rest of the world. It is unknown at this time what he will do after leaving the post.

At the same time, Mercedes will continue to add dealerships to its less mature markets, such as China. It will also move to set up smaller, boutique-style stores for its AMG and Maybach sub-brands, Fetzer said. The move is part of Mercedes’ recently announced strategy to focus on high-margin, low-volume vehicles.

Mercedes wants to move to a direct sales model, where dealers sell stocks owned by automakers, earning commissions in return. The automaker thus determines the final price and delivers it directly to the customer. Mercedes wants the model to cover 80% of its sales in Europe by 2025. The automaker is aiming for about 25% online sales by the same date.

According to Automotive News, Harold Wilhelm, Mercedes’ chief financial officer, said during an investor presentation last week, “We want to get closer to the customer and therefore have better control over prices.”

Cadillac has recently taken steps to reduce its dealer network in the United States by more than a third, providing cash incentives to dealerships that choose to close. However, even after the cuts, Cadillac’s dealer network is still larger than its competitors with about 560 dealerships remaining, despite the brand’s low sales.

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