Mercedes-Benz UK has started selling used cars direct to consumers.
Mercedes-Benz UK has made a significant leap in exerting greater control over its car sales distribution, by establishing retail sites, purchased from Lex Autosales, to sell its own brand used vehicles directly to consumers. The firm also plans to advertise and sell these vehicles over the Internet. The decision is aimed predominantly at extending Mercedes-Benz’ ownership of the product lifecycle and therefore its management of the brand; using the Internet should allow the firm to do this more efficiently.
It is a radical move. Mercedes-Benz is bypassing its own franchised dealer network, where these cars would previously have been sold. Also, the development of dedicated own brand used car showrooms is also unprecedented in the European used car market. It is a key departure from the traditional used-car-only sales model, which has always focused on providing strong variety and choice in used car retailing operations.
If any manufacturer can successfully introduce these new initiatives, it is Mercedes-Benz. The company has arguably the strongest brand name in the UK used car market, as well as a highly defined customer segment group. The combination of these two factors guarantees the company some success – but it could still encounter resistance from its dealer group, since they are now in competition.
This move also signals a level of preparation for the relaxation of Block Exemption in 2002. On the heels of Ford’s strategy of gaining control of a large proportion of its franchised dealer network to manage distribution of its product more closely, Mercedes-Benz has adopted a similar approach, possibly for the same reasons.
While going down the used car route is feasible for Mercedes-Benz, it is unlikely to be so for many other manufacturers. However, it does seem that there will be a trend amongst manufacturers to take greater control of their distribution; it is likely that several will elect to protect themselves from external competition in the future.
