Report: Mercedes-Benz to Adopt Agency Model in South Korea

After Malaysia, it seems that Mercedes-Benz Korea is also considering adopting the agency model for its vehicle sales operation. This business model allows the marque to push direct sales for its vehicles instead of going through dealers, while at the same time enables them to streamline their models' prices all across the board.

Mercedes-Benz Korea's store website

Speaking to The Korea Times, Lee Tae-hun, a professor at the Department of Car Business at Daekyeung University, said that the expansion of online sales has slowly become a trend in the automotive industry of late, which perhaps has prompted Mercedes-Benz Korea to do the same with their new car sales business.

“Mercedes-Benz Korea has already been selling certified used cars on their own online platform. As they do with used cars, they can sell new cars this way anytime. Hyundai Motor and Kia are also entering the certified car market here and are openly looking to bypass dealerships and sell cars online. It’s just a matter of when and I think the expansion of online sales is the unavoidable direction of the auto sales industry, as consumers have already adapted to buying online during the pandemic,” Lee said.

Existing Mercedes-Benz dealerships will be transformed into agencies, in charge of the vehicle deliveries

While considered as a new thing in most Asian countries, the agency model has been quite a staple for Mercedes in their home ground, where the marque has cut-down its dealership numbers, while bolstering its direct sales venture via official online platform. All in all, Mercedes-Benz targets that over 80% of its new vehicle sales will be direct sales by 2025.

More importantly, such a move would be seen as beneficial in cutting operating costs, particularly on the distribution and labour sides. However, it is important to note that this business model won’t eliminate dealers entirely, as they’ll act as an ‘agency’ that handles the unit deliveries, while after-sales businesses remain pretty much the same as before.

Should Mercedes-Benz Korea truly decide to adopt this new model just like what Mercedes-Benz Malaysia did, not only it could be an early example for the Asian markets, but it will also set a new precedent for other marques to follow suit.