M-B lodges defence to $650 million dealer law suit

Mercedes-Benz has filed a defence in the $650 million legal action brought against it by Australian dealers.

According to the Australian Automotive Dealers Association (AADA), in November, the Federal Court implemented an accelerated timeline for the litigation, with a trial scheduled for August 2021.

CEO of the AADA James Voortman, said Mercedes-Benz Germany had shown its cards. “Unfortunately, they are trotting out the same tired arguments for which, regrettably there is not a shred of evidence in support.

“Mercedes continues to repeat the mantra that it has consulted widely with local dealers. This is a complete furphy: from the very first discussions with dealers about this proposed revolution to the industry their trenchant opposition has been clear.

“The complete lack of consideration of our concerns has forced Australian dealers to resort to this litigation as a last resort.  The fact that 80 per cent of dealers are participating in this action should be evidence enough that the purported consultation has been woefully inadequate.

Voortmann said the AADA wrote to Mercedes head office in November requesting meetings to discuss its “serious concerns the lack of preparedness” for the introduction of the ‘agency model’ next month. “Despite promising to respond the ‘in box’ is still empty: this is consultation Mercedes style,” he added.

“The evidence in other markets and consumer research paint a stark contrast to the rosy picture Mercedes-Benz would have us believe. Implementation of the agency model in other countries has been shambolic, with dealers reporting massive system failures, a complete lack of training and zero visibility into stock outlook. 

“Unfortunately, history looks like repeating itself here in Australia where the rush headlong to implement a model the industry just doesn’t want has all the hallmarks of the same botched implementation.

Voortman said the AADA accepts that Mercedes-Benz is “perfectly entitled” to change its business model, however it does not accept “the appropriation of hundreds of millions of dollars in value” built up by the local industry over many years without the payment of compensation.

“While Mercedes would have us believe consumers are crying out for the Agency model the experience elsewhere and consumer research completely debunks this proposition,” he added.

“The example of Honda in Australia, after implementing the agency model, provides a stark lesson: Honda is the only top 20 car brand in Australia to experience three consecutive months of sales decline while all other premium brands have experienced increased sales.

“While it is currently illegal for Australian dealers to fix prices, Mercedes in Stuttgart is arguing for a regime where they will be able to do precisely that. They would have us believe that reducing competition will deliver better outcomes for Australian consumers,” he said.

The AADA said consumer research demonstrates that Australians strongly value the ability to shop around for the best deal, with 90 per cent of consumers surveyed stating the ability to negotiate on price is very or quite important.