More customers opting for Mercedes finance

MERCEDES-BENZ's successful strategy to attract a younger crowd is having an effect on the way customers pay for a new vehicle, with increasing numbers opting for finance and comprehensive ownership packages, rather than investing a single large sum.

The German car-maker is reporting a good uptake of its Agility Finance Program, which it introduced two years ago, that allows customers to include virtually all running costs in smaller payments rather than buying a car outright, and then having to stump-up for the associated ongoing expenses as well.

Speaking at the launch of the new GLC small SUV, Mercedes-Benz Australia/Pacific managing director Horst von Sanden compared the changing buyer behaviour to a mobile phone customer, who is far more likely to sign up for a plan rather than buying a phone outright.

“Tell me who knows what the retail price of an iPhone is?” he asked. “Nobody really knows and nobody cares. Everyone knows the price of a C-Class, A-Class, B-Class still, but I think it might be one day that its exactly like with a mobile phone, nobody knows. It's X dollars per week.

“Consumer behaviour, especially with younger people and their personal budgeting behaviour is completely different.”

Mr von Sanden explained the reason for the shift was down to a generation of drivers who prefer to reserve funds for other investments and disposable income, instead of tying up cash in large investments.

“Younger people they know their monthly income, they know that's for my rent, that's for my car, that's for my phone and this is my remaining disposable income.

“We have Agility, which is a guaranteed future value product so there are no surprises. You know exactly your cost per month, you have your mileage allowance and you hand the car back.

“You can throw in the service package and insurance, and every month the car costs me this much.”

Mr von Sanden explained that there were still a number of buyers who prefer to own a car without finance, but all customers are offered the range of Agility products, which includes, servicing, insurance and guaranteed value agreements.

“We make sure, at the point of sale, that every customer gets offered this option, even cash buyers who want to buy the car outright. We say 'have you really thought about that?’ Why would you invest, whatever – $100,000 and block it from other things?“We show them the finance concepts and it's actually increasingly becoming a choice for customers.”

While other parts of the world have been quicker to embrace Mercedes finance, Mr von Sanden said Australia had taken longer to see the benefits.

“Australia is maybe a bit behind – and behind I don't mean in a negative way at all – but here, a lot of people still believe strongly in the ownership of a car, but the fact is that the ownership of a car means you fix an awful lot of money, which you could use for other things.

“Everyone knows that financing concepts come at a cost, but it also gives you massive flexibility and freedom to use your money for other things.”