Dealers sue Mercedes-Benz for $650 Million in Goodwill Destruction Damages
Eight out of 10 dealers are suing Mercedes Australia, saying the fixed price agency model is an ethical, consumer violation. This could set a new legal precedent for retailers…
An hilarious $650 million legal stoush is suddenly in play in the Federal Court between a consortium of Australian Mercedes-Benz dealers, and the brand’s headquarters, back in Germany.
It’s a kind of high stakes ‘winner takes all’ sudden death suit to determine who is the biggest corporate cock in Mercedes-Benz retailing.
And I’m just going to milk this delightful turn of events for giggles endlessly. Mercedes and its dealers - and their respective lawyers - are all gonna hate me after this. Here goes.
The story so far: At the local branch of Mercedes-Benz, in Mulgrave, Victoria, senior executives have, I presume, scheduled a get-together with their dealers on January 1st, 2022.
The plan was to quietly remove their existing business modus operandi, extend them some ‘goodwill’, and then reinstate them with the public, except with no real commercial interest in the whole selling cars thing. All in the name of price fixing, which should be illegal, but: politicians, loopholes - you know the drill.
Thus the Mercedes ‘Fixed Price Guarantee, 2022’ was born >>. This, to me, is a core foundation of Mercedes-Benz business. Remember the crabbing problems, the outdated technology, the gag orders, and the opt-out Consumer Law non-compliance? They’re very consistent.
Mercedes has 65 retail outlets nationally, in Australia, operated by 50 dealers, and about 40 of these proud car retailing rebels have banded together in one last stand against the Mercedes Death Star. It’s dirtbag versus dirtbag.
This proposed operational adjustment (price fixing) will deliver the worst possible deal for consumers, thanks to this legal loophole. It’ll motivate Mercedes customers to shop at BMW and Lexus, with any luck, and it’ll slash Benz dealer profit margins. Plus, it’s an unethical affront to free market principles, which are great, except when they’re just in the way of corporate self-interest.
But aside from that, smooth move, Mercedes-Benz Australia.
It’s very difficult for an ordinary person to feel that much sympathy for car dealers. I struggle with this. Especially Mercedes, given the way they typically bend their customers over, but I can feel their radiating frustrations from Melbourne, where this action is taking place, and I even understand it.
It’s very difficult for car dealers to suffer being treated in the manner in which they treat their customers. It’s difficult to come to terms with being the receiver, when you’re accustomed to holding the stick. This is almost as abhorrent, philosophically, as a motoring journalist finding their so-called ‘review’ being reviewed by an evil bastard in a Fat Cave.
Anywho, the dealer rebel alliance, known as the Australian Automotive Dealer Association, said:
Hard to argue with that. That was James Voortamn, AADA executive speaking person.
But he wasn’t finished. These Mercedes dealers are properly pissed off, and they’re not gonna take it.
Here’s the real shot across the bows for other would-be car dealer corporate entities in the car industry thinking of shafting their dealers, and thereby their customers:
Expropriate, just to clarify, actually means ‘to remove from the owner for public use or benefit’. Keyword: public. It’s the sort of thing governments do, to expropriate your house to build a freeway.
Benz is not doing that because the use and benefit of the forfeited goodwill is entirely private, I’d suggest. You mean ‘dispossess’.
However, I take your point. If the dealers win, obviously, a precedent will be set and no carmaker will be safe if they attempt a systematic agency model and price fixing onslaught, in order to avoid paying fair compensation for killing off the dealer’s goodwill.
In other words, if you’re a carmaker thinking of commercially neutering your dealers, how does $15 million extra, per dealership, sound to you, plus costs, by way of legal precedent? (If they win.)
Daimler, being the card-carrying corporate cockheads they are, would probably appeal this all the way to the High Court - and that’s only if there isn’t some divine intervention.
So the real winners in this grubby business will be the lawyers on both sides, win or lose, because arguing the toss endlessly on this issue will be very expensive.
I can’t work out who I’d back in this fight: the dealers or the carmakers.
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DEALERS VERSUS MERCEDES: WILL THE CONSUMER WIN?
Representing the dealers is Tim Castle SC, who successfully represented Australian fast food franchisees when US-based Burger King bastards attempted to emasculate their goodwill because they thought they could get away with it. (Gotta love that moral relativism, up the big end of town.)
He’s the dude I’d want in my corner if Mercedes was planning to hold a blowtorch to my goodwill.
This case is all about the goodwill, obviously. It’s a question of ‘What’s it really worth?’
So, anyway, the dealers’ Castle ran the numbers and determined the value of goodwill obliteration on Jan 1 would be $650 million in damages, and here we are. You’re all caught up.
Mercedes Australia’s own dealers are just filling out the pistols-at-dawn paperwork, and doing it in public - the ultimate dirty laundry oxygenation.
I absolutely love it and hope this drags on for months, years even. I hope both sides lose. Not sure it works that way, but one can dream the High Court of Australia orders them to continue to sleep together afterwards, indefinitely.
There is scuttlebutt in the industry that Mercedes-Benz Central used coercive practises to get dealers to sign their new contracts, such as by withholding the supply of new vehicles to sell until they were ‘on board’. It’s just a rumour, but it sounds entirely characteristic to me.
James Voortman again, expropriating words to Drive, pushing the barrow for the Mercedes dealer conga line. He described the negotiation process to Australia’s second-most-hated motoring journalist, Josh Dowling, recently, as “this is consultation with a gun to the head”.
I suppose that’s either good or bad, depending on who’s holding the gun.
The Mercedes Death Star says:
I’m sure that’s what they said in the boardroom when the writ arrived. The big Saddened Horst, I’m presuming, said to the lawyers, “That is disappointing, isn’t it?”
“Yes, it is, sir. Very. I trust you would like us to defend our position vigorously?” the lawyer robots potentially said in reply.
The company further claims its new Shit Price Guarantee (that’s what I’m calling it, anyway) will deliver greater transparency, allegedly, and better choice, plus availability of even more models.
But, like Australia’s current prime minister, Scotty From Marketing, do you really believe a word coming out of the collective mouth? No. Nobody does. It’s just platitudes and PR buzzword bingo, being fired at you in the hope you’ll swallow it. Or step in it.
I think there might be some egos out of control in the Benz boardroom.
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