Mercedes is demanding that dealers pay more for EVs.
Mercedes-Benz plans to invest over $46 billion between 2022 and 2030 to develop and launch all-electric vehicles. The Mercedes EQS and EQE are only the beginning. The ultimate goal is to become an EV-only carmaker by 2030 as well. But in order to accomplish that on time, Mercedes must have those necessary funds available and dealerships will help provide them. It's standard operating procedure for automakers' franchised dealers to contribute a trade margin, but the question is how much?
Automotive News has learned that the German luxury brand has informed its US dealers of its intention to reduce their margin by half a percentage point. Dealers will now take home a 13-percent margin, instead of 13.5 percent. In other words, Mercedes needs slightly more help from dealers to pay for EVs.
This plan is in contrast to what Mercedes-Benz USA CEO Dimitris Psillakis claimed last spring when he said the company's switch to EVs won't affect margins. Evidently, those plans have changed. The carmaker is fully aware that dealers aren't happy about this decision, so it made them a promise not to cut into profit margins for at least another five years. In addition, it will offer new bonuses on EV sales and certified pre-owned models.
Now, it should be pointed out that Mercedes' US dealers are currently making more money than ever before. The corporate office's decision to slightly cut back on profitability won't dramatically hurt them. However, some dealer owners are concerned about an economic slowdown in the next year to 18 months.
Those good times might be about to slow down and reduced margins won't help matters. Looking more long-term, Mercedes predicts its all-electric future will provide plenty of new money-making opportunities. "We're going to sell the hell out of these vehicles," Psillakis told his audience in Las Vegas at the recently held annual national retailer meeting. Dealers were told the American EV market is expected to grow 850 percent over the next six years.
Mercedes will soon offer two-year leases that bundle everything from regular maintenance and free fast charging into a single package. It'll be an offer luxury buyers will find difficult to refuse.