Australian Mercedes-Benz dealers set to battle OEM for $650 million
The Australian Federal Court has agreed to fast-track a $650m litigation case brought by Australian Mercedes-Benz dealers against the German manufacturer.
More than 80 per cent of Mercedes-Benz dealers have combined forces to challenge the manufacturer’s new agency business model. Under the model, which is due to commence in January 2022, Mercedes-Benz retains stock ownership and dealers attract commission on fixed sale prices.
A trial date has now been scheduled for August 2022, with the matter next coming before the court in February next year.
According to the Australian Automotive Dealers Association (AADA), the case is a “critical test of Australia’s Franchising Code of Conduct and Australian Consumer Law”, and the move from a self-run business model for dealers to “mere agents and re-sellers” for the manufacturer would have “drastic implications for the future of their businesses.”
AADA CEO James Voortman, stated: “We are delighted the Federal Court agrees with us that the issues in our case are urgent and deserve to be heard as soon as possible. We can now take the fight up to Mercedes-Benz without delay to seek justice on behalf of the Australian industry.
“Despite strenuous efforts by Mercedes-Benz to delay the start of proceedings, we are pleased to have a trial date for next year and for a process that will see us back in court in February at the latest.”
“This is a watershed issue for Australian consumers and the entire Australian franchise industry. If Mercedes is successful in forcing these changes on the industry, history shows competition will go down and car prices will go up,” Voortman added.
Mercedes-Benz is set to join Honda Australia which moved from a franchised dealer model to the agency in July 2021.
Honda averaged only 896 sales per month over the agency model’s first quarter but sold 1100 units in October; still short of its 1650 monthly target.
Year to date, Honda sales have dropped 39.1 per cent, to 14,560 units, according to VFACTS data for October 2021. This compares to the overall vehicle market increasing 22.7 per cent over the same period.
