BRESCIA, Italy – Smart dealers say they are happy with the brand’s change to a direct-sales agency model, which the joint Mercedes-Geely brand initiated last year by negotiating new contracts ahead of the launch of the #1 full-electric small SUV.
"We are happy about the commission structure we are getting for the #1; our only complaint is that we need more product, so we don’t have consumers waiting for too long,” Ossuama Kaddoura, a Paris-based dealer who is also president of ASP (Smart Partner Association) told Automotive News Europe last week on the sidelines of a dealer event in Brescia.
On the #1, Smart agents get on average a fixed 7 percent commission on prices that start at 41,490 euros in Germany. The #1 is invoiced to customers directly by Smart Europe, a 50-50 joint venture between Mercedes-Benz Cars and Zhejiang Geely Holding Group of China.
On the electric ForTwo EQ city car, dealers – who still sell this model under a franchise contract with Mercedes – get an average 15 percent gross margin on prices that start at 19,262 euros in Germany. The ForTwo, a holdover model from when the brand was fully owned by Mercedes, will continue to be sold until 2024.
The commission on the #1 and average margin on the ForTwo are about the same, but dealers earn more on the #1 because they do not have to bear marketing and inventory costs, which under the agency model are the automaker’s responsibility.
Under a franchise contract, dealers must absorb those costs.
"What we really need to be happier is more product, because we see a 20,000 to 25,000 units potential for the #1 in Europe, but only Germany is getting deliveries at the moment,” Kaddoura said.
More and more automakers are moving to the agency model in an effort to cut distribution costs and gain a closer relationship to their customers. Mercedes has already started using the model in the U.K.; Volkswagen Group is using a form of the scheme for its full-electric cars; and Stellantis is negotiating with its dealer network as it prepares to introduce its version of the sales model starting in the middle of this year.