New South Wales ALP Senator Deborah O’Neill has essentially accused Mercedes-Benz of lying to the Senate when explaining its new ‘dealership’ business model and the expected impacts for agents.
Speaking in the Senate at the end of March this yearSenator O’Neill accuses local management of Mercedes-Benz of misleading a Senate Committee hearings on the relationship between car manufacturers and car dealers, in Australia, in November 2020.
The dealership model, which Mercedes-Benz Australia transitions to in early 2022 and Honda in 2021, means the car company now controls new car sales nationwide and sets pricing, rather than wholesale vehicles to dealers. Then negotiate the price with the customer.
The luxury car brand has long said its customers want transparent pricing, equal vehicle access no matter where they reside, and a simpler buying process. It also states that dealers (or dealers) will reduce business risk by avoiding the need to finance their inventory.
“The Mercedes-Benz dealership model is only concerned with new car sales. Based on industry data, the majority of a dealer’s profits come from other parts of their business such as vehicle maintenance services, spare parts sales, financing and used car sales”, Mercedes- Benz stated in the Senate Submission.
“With the Mercedes-Benz dealership model, dealers will be better positioned to focus on their core business of delivering the ultimate customer experience during their vehicle purchase.”
According to the report at the end of 2021Mercedes-Benz is also switching to this dealership model in Europe, after reaching an agreement with the European Association of Mercedes-Benz Dealers.
While more than 50 Mercedes-Benz Australian dealer operators have all signed off on the revised agreements (after existing dealer agreements lapse due to concurrent design), they announced last year did so the hard way.
They brought a $650 million lawsuit in Federal Court invoking good faith aspects of franchise law being violated, this is happening. Mercedes-Benz Australia claims to have consulted extensively with its dealers throughout the move, which they call “a lengthy and inclusive process”.
At the heart of the matter, agents say they deserve to be compensated for signing up for a business model that will make them less money after investing millions in public branding. Mercedes-Benz. It has nothing to do with banning the dealer model but rather compensating dealers who feel they are strongly equipped to adopt it.
James Voortman added: “Without benefiting the consumer, the transformation proposed by Mercedes-Benz is driven by a desire to capture more than $650 million in value from dealers-built businesses. build without paying a dime.Chief Executive Officer of the Australian Automobile Dealers Association (AADA).
In his four-minute presentation, ALP Senator O’Neill said “the growing power and arrogance of large Australian multinationals have found fertile ground in actions government stuttering to bring justice to our franchise.”
This refers to news from March 2021, detailing changes to code governing contracts between dealers and their franchisees – an issue that caught the eye of the public as Holden went out of the market and was later accused of treating his agents badly. The Senate Inquiry was later expanded into a more general look at the industry.
Australian Electoral Commission’s transparent registration shows that ALP received $83,200 from AADA during 2020-21.
Senator O’Neill said: “Seven key assertions were made by senior Mercedes-Benz executives in statements before the Senate Employment and Education Reference Committee on the 23rd. November 2020.
“Mercedes-Benz confirms that dealers are satisfied with the proposed changes,” added Ms. O’Neill.
“That they have consulted extensively with dealers about the changes, that the dealership model will benefit dealers, that the reason Mercedes-Benz has switched to the dealership model is because It is in the interests of the consumer, that dealer profits will not be affected, that Mercedes-Benz has made a long-term commitment to dealers and that Mercedes-Benz will not profit from the switch to a dealership model.
“I affirm under the weight of current evidence that Mercedes-Benz appeared [sic] to wrongly lead the Senate Committee. Dealers detailed claims from Mercedes-Benz dealers in their current lawsuit instead of pouring water on those seven claims.
“Agents were not satisfied with the proposed changes and in many meetings – many meetings – overwhelmingly voted not to continue with the agency model. Mercedes-Benz has not consulted extensively with dealers; in fact, when dealers tried to negotiate certain terms of the model, Mercedes-Benz issued a notice of dispute under the concession code. permission “.
The senator later claimed it was “merely … about securing greater profits in Stuttgart, rather than the main streets in the suburbs and regions of Australia”.
“This is an extremely serious matter and raises the question: if Mercedes-Benz is willing to give lies to members of the Australian Senate, who else are they willing to lie to? These dishonesty must be raised in the public interest, for the benefit of Australian business and the Australian dealer network.
“The Australian senate must not treat large multinationals who are only interested in profiting and shipping overseas.
“I will be monitoring developments and, given the severity of my concerns, I plan to take this matter to the Senate Employment and Education Reference Committee to request that the matter be brought to the fore. President of the Senate as a matter of privilege.”
Speaking in response, a spokesman for Mercedes-Benz Australia responded with the following statement – scope limited due to the ongoing case. CarExpert will be monitored.
The company said: “Mercedes-Benz Cars Australia has long marked a move towards modernizing the buying experience for our customers.
“Despite the fact that all of our resellers have signed on to the new agency model after a lengthy and exhaustive process, unfortunately some in our network have decided to start legal proceedings.
“It would be inappropriate to make any comment, until the legal proceedings are concluded. We ask that court process be respected at this time.”
You can find more stories on this often confusing subject here.
THAN: ACCC ends Holden investigation, but still criticizes his conduct
THAN: Trade for winners in new federal franchise code
THAN: Mercedes sticks to its guns, dealers claim compensation when switching dealers
THAN: Australian Dealers Association ravages Mercedes-Benz, FCAI for ‘fake news’
THAN: Mercedes-Benz convinces European dealers to apply the dealership model