I see from subsequent posts that indicate that you a Mercedes salesmen. You may well have more accurate information than we have.

With that in mine here goes - with the caveat that I could be 100% off base and wrong:

if a dealer sold 100 cars a month, had 500 cars in inventory and received 100 cars a month from Mercedes at the end of the year the dealer would have sold 1200 cars and had 500 in inventory. Now assume Mercedes’ cut the dealer’s allotment by 50% to 50 cars a month. The dealer would sell his inventory of 500 cars plus allotment of 600, total 1100 vs. 1200 cars a decrease of 8%. However without inventory the next year’s sales would be 600 vs. 1200 a 50% decrease.

As to savings by laying off salesmen. This I suggest is deminimus as most of the compensation to salesmen is not salary but commissions.

As we all know the dealer’s largest profit center is service: repairs that used to take a few days can now, because of supply chain issues, take weeks even months, further eroding profits. In the long run fewer sales mean fewer cars to repair again further eroding dealer’s profits.

We are not even considering the changeover from ICE to EV’s which will require fewer and far less expensive service which will further erode dealer’s profits.

That it is why, unless production returns to pre-Covid levels I see dealer’s on the “fringe” will close and a consolidation of those that remain. I see no reason for what happened to American car dealers not to happen to foreign car dealers.

The elaborate and expensive showrooms and service centers that dealers have built need volume to be profitable. The dealers need inventory. The present model is neither sustainable or profitable if dealers sales are limited to pre-orders. To be profitable relying only on pre-orders Mercedes would have to follow the route of Tesla: Salespeople on salary, virtual showrooms, physical showrooms very, very very small and regional service centers, and minimal options and ordering online and zero advertising budget. Tesla as compared to a Mercedes dealership has no overhead

 

Here is my math:

14 salesmen selling only 10 cars per month are 140 cars per month.

8 salesmen selling 8 cars per month is 64 cars

As I posted above selling, the dealer is now selling 55% fewer cars.

Run the numbers: the overhead can not be meet losing 55% of your sales. Unless Mercedes supports the dealership they will close. For your dealership to survive the number of units sold must increase.

 

I had to resurrect this thread....read an interesting article today that supports our argument:

"Mercedes has a busy schedule up ahead as it aims to slim down on the number of entry-level cars from seven to four in a bid to pursue higher profit margins with bigger and more expensive cars. To make it happen, the German luxury brand has decided to invest more than 75 percent in vehicles from the C-Class segment above, thus relying less on the compact models. Another major change will take place within the distribution network."

"Speaking of which, its distribution network will be overhauled by cutting 10 percent of dealerships globally by 2025. Three years later, there will be up to 20 percent fewer showrooms at home in Germany. Automotive News Europe cites Bettina Fetzer, vice president of communications and marketing, saying Mercedes needs fewer big dealerships in mature markets. However, new outlets are being added in China. In addition, dedicated AMG, Maybach, and G-Class showrooms are on the agenda as well."

"Even though the sales volume had to suffer, profits were healthy. It showed Mercedes it can concentrate more on larger and more luxurious vehicles to the detriment of compact offerings."

https://www.motor1.com/news/587649/m...rcent-dealers/

 

Personally I think this is all BS: 20/30 years ago there were no C Class and lower. It was E and S class. There are only so many luxury priced cars the market can support. Mercedes like all manufacturers wanted to increase production, the more units sold the more profits. To expand Mercedes, Audi and BMW had to expand downwards. Then Mercedes added SUV's to their line up.

Here is my take: there are supply change shortages that are going to extend into the foreseeable future. EV's are going to replace ICE, but no one has figured out how to make a $30,000 EV with 300 miles of range.

If you are faced with limited production, then the only logical thing to do is to take a hit on number of units sold and concentrate on those cars which give you the most profit.

The real losers here are the dealerships. Using round numbers, for example if the dealership sold 100 E Class with MSRP of $75,000, dealer cost $60,000 discounted them 5% for a selling price of $71,250, profit per car $11,250, total profit,$1,125,00..

Now assume the dealer only gets 50 E Class to sell. To get the same $1,250,000 in profits, he needs profit of $22,500 per car. That equates to a selling price of $82,500 per car ($82,500 selling price less $60,000 cost). For the dealer it is a vicious cycle: prices go, volume goes down.

Equal dismal for the dealership is that there will be 50% fewer cars to service.

On Long Island and NYC were I live, dealers have spent millions upgrading their dealerships, some look like a Four Season Hotel, and their service departments. These are huge capital expenditures that only can be justified with high volume. I predict that many, many marginal dealerships will close. The projected figure of 20% I think is an understatement.

But then again, does anyone feel sorry for a dealership?

Just my $.02.