Mercedes Has A Plan To Make Over $1 Billion

Industry News / 3 Comments

By selling a bunch of showrooms.

As the global economy fights its way out of the coronavirus pandemic, automakers are reevaluating how they do business in general. Aside from the rapid emergence of electric vehicles, another significant change is how new and used vehicles are sold. Buyers no longer have to step foot inside a dealership but can rather conduct the entire transaction online. Dealers will even deliver the vehicle to customers' homes.

With this in mind, Mercedes-Benz has come to a decision: it wants to sell about 25 showrooms and service centers throughout Europe, specifically the UK, Spain, and Belgium. The German automaker confirmed the plan to Reuters and added that any deal must guarantee job security for affected employees.

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"In potential talks with interested buyers, high priority is placed on their long-term economic success and the continuation of the Mercedes-Benz's operations." Some of Mercedes' European showrooms are massive facilities and they're not cheap to operate. Unlike in the US, European law allows for factory-owned dealerships. This makes doing business there easier for carmakers like Tesla who continues to fight against the powerful US auto dealer lobby for its right to a direct sales model.

Mercedes, like nearly all other automakers, wants to cut operating costs and, if possible, sell unnecessary holdings in order to help generate cash that can be re-invested in electric vehicle development. These dealerships have a total value of around $1.2 billion.

2020 Mercedes-Benz EQC Front View Driving Mercedes-Benz
2020 Mercedes-Benz EQC Front Angle View Mercedes-Benz
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The recently-revealed Mercedes EQS, a high-tech EV flagship, is just the beginning of what will eventually be an all-EV lineup. The EQC and EQA are already on sale in some markets. Funds are also necessary for the development of automated mobility systems. Mercedes' decision to begin drifting away from owning dealerships is definitely a sign of the changing times.

The way it sees things, letting private entities own and operate some of its dealers is simply easier. But there could be a downside, one that Tesla fully understands. Consumers, in general, are far more familiar with ICE vehicles than EVs, and having direct control on how to educate them on the new technology can be critical. Directly owning and running those dealers can make the task less complicated.

2022 Mercedes-Benz EQA SUV Front Angle View Mercedes-Benz
2022 Mercedes-Benz EQA SUV Charging Point Mercedes-Benz
2022 Mercedes-Benz EQA SUV Dashboard Mercedes-Benz
Source Credits: Reuters

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