Daimler Suspends China Mercedes Dealership Franchises Following Customer Complaint Video

Daimler AG
Mercedes logos are seen ahead of the Shanghai Auto Show, in Shanghai (Photo: Reuters)

Following a customer complaint video that had gone viral, Germany's Daimler AG immediately suspended major dealerships' franchise in China pending further investigation.

The video, which showed an unhappy Chinese customer protesting at a Mercedes dealership had sparked public outrage in the country, which placed the company's customer service and business operations in question.

In response to the viral video, Daimler also released a statement, which apologized to its customers in China.

The head of China operations for Daimler, Hubertus Troskas, personally apologized for what had happened and assured customers that they will be launching their own investigation into the matter. Troskas also mentioned that they take consumer protection very seriously and the company does require all dealerships to follow the law and ethics of its brand.

The viral video that had caused the public outrage involved a woman who recently bought a Mercedes vehicle complaining to employees at a dealership.

The vehicle was apparently leaking oil onto the showroom floor. The woman apparently requested a full refund and refused the dealership's offer to fix the oil leak. In addition to the mechanical complaint, the woman also complained about how she was treated by the dealership and how they had forced her to take out a loan with very high fees.

The unidentified buyer reportedly wanted to pay cash for the vehicle, but she was reportedly pressured by employees to take out a loan instead.

The woman also later revealed that she was being unjustly charged by the dealership for a "financial service fee," which amounted to around US$2,235. In China, automotive dealerships are not allowed to add or collect the so-called financial service fees, which is a violation of customer rights under the Banking and Insurance Regulatory Commission (CBIRC).

Daimler revealed in its latest statement that the dealership located in Xi'an city in Shaanxi province has already settled the matter with the customer through an amicable agreement.

However, the company's statement is contrary to the statements made by the irate buyer, who mentioned to local media that she was not going to accept any settlement offer until an investigation by consumer protection authorities is launched.

Daimler had stated that it will still be suspending all local sales franchises until it concludes its own investigation.

Meanwhile, Xi'an city authorities have announced that they will also be launching an investigation into the matter and looking into actions done by various dealerships that potentially violate local laws and market regulations. Similarly, the CBIRC announced that it has already asked its branch in Beijing to launch an investigation on Mercedes-Benz's auto financing unit for the alleged collection of illegal service fees.

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