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July 23, 2019

Fish hooks seen in Daimler’s online retail plans

A statement by Daimler's Mercedes-Benz it aims to complete 25% of new car sales online was a welcome development in motor retail, according to a UK company which provides cloud based dealer management software, but there are issues to be resolved.

By Olly Wehring

A statement by Daimler’s Mercedes-Benz it aims to complete 25% of new car sales online was a welcome development in motor retail, according to a UK company which provides cloud based dealer management software, but there are issues to be resolved.

Britta Seeger, Daimler’s Mercedes-Benz Cars sales and marketing chief, told those attending a dealer opening in the Netherlands: “We expect that by 2025, 25% of our worldwide sales will take place online.”   However, iVendi, which claims market leadership in UK online motor retail, said there could be structural issues that ultimately block this level of penetration.   CEO James Tew said: “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. For some time, we have been talking about the development of a hybrid model where customers can take every step of the ‘sales journey’ online or offline as they see fit.    “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 added 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.   “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.”   He added the publicity surrounding the Mercedes Benz announcement was welcome and should prompt other manufacturers to look at their online activity.   “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.”

Since the Mercedes announcement, the UK’s Volkswagen Commercial Vehicles and Volkswagen Financial Services announced a new contract hire direct web service.

The pair claim over 80% of new vehicle customers begin their shopping process online.

The new service allows customers to pick a desired model and calculate a finance quote online for stock vehicles.

But it’s not all online. They next need to speak to a salesperson to place the order. Once finance is approved, the customer can select an outlet for collection or delivery.

However, VW said: “The aim is for a complete online process, from quote to delivery to the customer in the future.”

Sarah Cox, head of marketing for VW CVs, said: “We would expect to see more direct sales options coming on line in future.”

Daimler future models – Mercedes-Benz cars

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