Mercedes lays groundwork for more software-based upgrades

A glimpse of the business to come may be seen on the new E-class, shown here this week. It contains Mercedes’ next-generation MBUX infotainment system, which uses artificial intelligence to deliver greater personalization by learning the driver’s frequently used comfort settings, enabling programmable routines and facilitating new apps to be added to the car, Mercedes said.

To help grow the subscription business, Mercedes has reached a revenue-sharing agreement with its retailers to sell on-demand digital services.

In 2023, dealers will receive 13 percent of their customers’ subscription revenues. Starting next year, dealers must meet training requirements and hit subscription sales volume targets to earn the revenue share.

Profit-sharing is a “motivational program” that gives dealers skin in the game, Mercedes-Benz USA CEO Dimitris Psillakis told Automotive News.

Getting retailers on board with the new business model will be crucial to adoption.

“Dealers are our partners in the business,” Psillakis said. “They know the customer, they know the lifestyle of the customer, they can promote and sell the products which fit the customer needs.”

Automakers’ efforts to directly sell digital services and performance upgrades blur the lines between retailer and manufacturer.

Jeff Aiosa, owner of Mercedes-Benz of New London in Connecticut, said dealers could construe over-the-air subscription services as crossing state franchise laws.

“But Mercedes’ decision to give the retailer their margin on these over-the-air purchases removes the heartburn that could exist relative to state franchise laws,” Aiosa said.

Garth Blumenthal, CEO of Unstoppable Automotive Group, which operates a Mercedes store in Temecula, Calif., described the revenue-sharing agreement as a win-win for the factory and its dealers.

“The fact they were willing to give us a piece of the action for really doing nothing other than selling the car, I think that’s a plus,” Blumenthal said. “It’s extra revenue.”