Mercedes-Benz continues to apply changes to its dealership model in Europe, with reports of further cuts being on the way emerging overnight.

It’s reported that the brand will be shrinking the amount of dealerships in its home market of Germany by up to 20% by 2028, and 10% globally by 2025.

The brand aims for 25% of its sales to come from online by 2025, while also aiming for 80% of its outright sales to come via its much-debated direct sales agency model by the same year.

In an interview with Automotive News Europe, Mercedes-Benz vice president of communications and marketing Bettina Fetzer said mature markets will be the first to have their volume of dealerships reduced.

“We need fewer large showrooms in mature markets,” Fetzer said.

“We will move away from large showrooms, especially when we move to direct sales. All of these efforts combined give us a competitive advantage, but the full leap comes when we combine that with direct sales.

“This gives us a direct management of the customer relationship, and we will know our customers even better.”

Mercedes’ agency model sees the brand selling cars to customers directly, with the role of dealerships in the sales process significantly reduced. The model has been subject to plenty of debate in Australia, where it has been adopted.

The brand is currently embroiled in a legal battle with 41 of its own dealerships in Australia, with the dealers having launched an AU$650m legal action against Mercedes-Benz due to the view that the change in sales model undermines the millions of dollars dealers have invested in their businesses.

A report published late last month by the Australian Financial Review detailed the surprise of some dealers who had previous emails that they had sent to the brand used as evidence of support of the agency model. One of these dealers was former race driver and dealer owner Andrew Miedecke.

“I am slightly surprised to learn an email from me sent as long ago as 2019 is being used by Mercedes-Benz to imply dealers are supportive of the introduction of the Agency model,” he said.

“Now that I have had an opportunity to examine the model in detail, I want to make clear I am totally opposed to the agency model and believe it is a bad outcome for dealers and also consumers.”