Mercedes-Benz plans to shrink its worldwide dealer network over the coming years, with most of the cuts to take place in the automaker’s home market of Germany.
In an interview with Automotive News (subscription required) published on Monday, Bettina Fetzer, Mercedes’ vice president communications and marketing, said the cuts will be completed by 2025 for most markets. She said cuts in Germany will run through 2028 and cover between 15 and 20% of the dealerships there.
Mercedes has around 1,000 dealerships in Germany covering both the Mercedes and Smart brands, versus about 6,500 for the rest of the world. It isn’t clear if any cuts are planned in the U.S., where most dealerships are franchise owned.
At the same time, Mercedes will continue to add dealerships in its less mature markets, such as China. It will also move to establish 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 also wants to move to a direct sales model, where dealers sell stock owned by the automaker, receiving a commission in return. This way the automaker sets the final price and directly invoices the customer. Mercedes wants this model to cover 80% of its sales in Europe by 2025. The automaker is also targeting online sales of around 25% by the same date.
“We want to have more proximity to the customer and therefore have better control over pricing,” Harald Wilhelm, Mercedes’ chief financial officer, said last week during an investor presentation, according to Automotive News.
Cadillac recently made moves to reduce its dealer network in the U.S. by more than a third by offering cash incentives to dealerships that choose to close down. However, even with the cuts, Cadillac’s dealer network with roughly 560 dealerships remaining is still bigger than rivals despite the brand having fewer sales.