In a landmark case for the Australian automotive industry, the Federal Court has ruled Mercedes-Benz is free to set fixed prices and sell direct to customers, rather than let dealerships haggle, write Vishal Mehrotra and Rajat Roy.
But after Mercedes-Benz shifted to fixed-price sales in January 2022, 38 of its 49 Australian dealerships banded together to seek compensation for changes they argued decimated the value of their businesses.
Justice Beach's verdict, which runs to 567 pages, is decisive. It dismisses all the dealers' claims against Mercedes-Benz, describing the case as "forensically complex although legally straightforward".Dealerships are independent businesses. As official franchisees, Mercedes-Benz would sell them vehicles at wholesale prices. They would then resell the vehicles at a price negotiated with customers. This allowed them to set their own profit margins.
The new agreements meant Mercedes-Benz took control of the sales process. It retained ownership of the vehicles and set the sales prices, paying dealers a fixed commission on sales. A buyer could buy a car online. Their only contact with a dealership might be to pick up their new vehicle.Goodwill is an intangible asset that represents the value of a business over its book value .
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