Announcing a major shift in its retail strategy for our market, Mercedes-Benz India has unveiled its new ‘Retail of the Future’ (ROTF) direct-to-consumer sales model. Set to be implemented from October 2021, ROTF will ring in changes for Mercedes dealers in India and promises to transform the buying experience for potential customers. Under this business model, Mercedes-Benz India will own the entire centralized vehicle stock. It will directly invoice a purchase to the buyer, in addition to handling order processing and fulfillment.
With Mercedes-Benz India making the entire pool of cars in stock available to buyers, prospective customers will benefit from a single price for every model across the country and also have a wider variety of models and specifications to choose from, as they won’t be bound by the options available at a particular dealership. Additionally, Mercedes-Benz aims to eliminate the practice of price negotiation entirely by offering what it calls the ‘best price,’ which will be available to buyers straight from the manufacturer. Customers will also be able to compare prices easily, and the company states this will further simplify the vehicle purchase process.
While dealers will continue to be the point of contact for customers as they will facilitate the purchase, the benefit for them will be that they own no inventory under this business model and hence benefit from a lower cost structure and carry little market-facing risk. They will be directly compensated by Mercedes-Benz India for vehicle sales and will continue to develop local market requirements, retail marketing activities, lead generation, and manage customer relationships. There will be no change to the existing dealer infrastructure.
It’s important to note that the ROTF business model will only apply to Mercedes-Benz India’s new car business. Its pre-owned car business and other business lines will continue as before.
Speaking about ROTF, Martin Schwenk, Managing Director, and CEO, Mercedes-Benz India, commented, “This long-term strategic move will strengthen our customer focus by introducing a fundamental transition in the retail business in the market. It will also deliver a win-win solution for both customers and Franchise Partners, underscoring our clear vision for a sustainable, empowering, and digital future. The advent of a new sales channel has brought sweeping changes in customers’ aspirations and requirements and being a customer-obsessed brand, we have adapted our current business models to meet our customers’ aspirations and needs.”