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Australian Mercedes dealers are seeking $650m in compensation from the manufacturer over its decision to move to a fixed-price agency sales model.
Thirty-eight of the nation’s 55 Mercedes-Benz dealerships have launched legal action against the company in the Federal Court. The manufacturer made the switch in January of this year.
ABC News reported that dealers argue they were “forced” to sign new agency model deals, and that the move will drastically reduce profits and “wipe out years of goodwill with customers”.
The outlet also said that the majority of Australian dealers were against a move to agency, who now claim that Mercedes has broken Australian Consumer Law by “engaging in unconscionable conduct, along with breaching the franchising code’s good-faith provisions”.
The case in Australia comes ahead of Mercedes’ plans to switch its European dealers to an agency model. In December 2021 it announced that it had reached an agreement with the European Association of Mercedes-Benz Dealers (FEAC) to introduce an agency model in Europe.
The Mercedes agency model has also been introduced in Sweden, in Austria and in South Africa as well as in India. Its launch in Germany and in UK is expected in 2023 and said by the end of 2023 more than 50% of its vehicles sold in Europe will be through the agency model.