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Mercedes-Benz’s 25% online car sales target ‘conservative’, says iVendi

James Tew, iVendi

While Mercedes-Benz’s aim to complete 25% of new car sales online by 2025 are a welcome development in motor retail the German manufacturer’s targets could be considered “conservative”, says iVendi.

James Tew, the chief executive of the online automotive finance platform, conceded that the company, which claims market leadership in online motor retail, could yet face structural issues that ultimately block this level of penetration.

But he added: “The question is what Mercedes-Benz are really planning to achieve. Do they envisage that 25% of new car deals be fulfilled online or will the entire process be web-based? These are very different objectives.

“If it is a question of fulfilment, then the 25% figure may be very conservative.”

AM exclusively reported on the next stage of Mercedes-Benz’s plans for an omnichannel car retail offering last week, following a visit to a conference held by the brand at its new dealership in The Hague.

Speaking at the event Britta Seeger, member of the Board of Management of Daimler AG responsible for Mercedes-Benz Cars marketing and sales, said that the aim of all future developments by Mercedes-Benz would be that of serving customers’ needs with greater ease “anytime, anywhere” with the use of a “single log-in for the Mercedes Me platform”.

But while Seeger revealed that a quarter of car sales will be fulfilled online within the next six years - in an echo of the comments made to AM by the brand's UK chief executive, Gary Savage, in 2016 - she sought to reiterate the “strong relationship” the German premium brand with its 6,500 franchise partners across the globe as it aims to align its online activity.

Tew said that OEMs had been talking “for some time” about the development of a hybrid model where customers can take every step of the sales journey online or offline as they see fit.

He added: “However, if it is a question of a quarter of all car sales taking place completely online, there remain fundamental structural problems, the biggest of which is pricing.

“Like almost every other manufacturer, Mercedes-Benz sells very few of its cars at list price, so there needs to be either a new approach to pricing or a mechanism for online price negotiation. To date, no-one has arrived at a satisfactory method of resolving this problem.”

Tew said that there were a range of other advantages and disadvantages that needed to be tackled as part of a pure online sales model.

“From a regulatory point of view, there are some distance selling elements to overcome although we do not see these as insurmountable and it is also arguable that an online process creates a greater degree of choice and transparency for the customer, which is in line with the way in which regulation has been moving,” he said.

“There is also the question of how add-on sales such as warranties and service plans are handled. These have become an increasingly important element of profitability for manufacturers and dealers in recent years and any online sales process needs to ensure that current levels of penetration are maintained.”

Tew added that the publicity surrounding the Mercedes Benz announcement was welcome and should prompt other manufacturers to look at their online activity.

He said: “With some exceptions, most manufacturers have been approaching online new car sales on a toe-in-the-water basis that has seen them fail to really engage with the opportunities available in such a way that it will deliver results for them and their dealers.

“This is one of the reasons that the online new car buying experience generally fails to get anywhere near the best overall online retail offerings available.

“So, it is good to see a manufacturer outline a strategy in this fashion. It should mean that there is more of a discussion around the benefits of online sales in this market.”

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