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Over half of car buyers would prefer agency retail model, What Car? finds

A social distanced car sales experience in masks

The promise of standardised pricing and an end to showroom haggling mean that 55% of car buyers would prefer an agency model in the automotive retail sector, according to What Car? research.

A survey of 1,310 car buyers conducted by the consumer publication found that more than half would prefer to see standardised prices across showrooms and deal direct with manufacturers.

It also found that 65% would be more willing to buy their next car online if manufacturers operated an agency sales model for dealers, while just 23% of respondents told What Car? they enjoy haggling when buying a car.

What Car? editor Steve HuntingfordWhat Car? editor Steve Huntingford said: “The agency sales model is one of the hot topics for 2022. While our research shows the majority of buyers support the move to it, and that it could result in a significant increase in online retail for manufacturers that adopt the model, it remains to be seen whether the industry can hold its nerve on pricing when it is running at full capacity.

“To work, it's clear that automotive retail sites need to be slick and easy to use, and have adequate support in place to give customers the confidence to commit to set prices, rather than shop around, both for discounts or among rivals who might not have the same rules in place. With this in mind, it’s important manufacturers considering moving to an agency model ensure their online retail platforms ensure they are capable of meeting expectations.”

Manufacturers including Volkswagen and Volvo are among those that have already made the move to agency-style agreements though online sales of their electric vehicle (EV) model ranges.

Last month Mercedes-Benz reached an agency model agreement with its retailers across Europe, meanwhile, which will lead to the new retail framework's introduction in the UK from 2023.

In an interview with AM featured in the current edition of AM magazine, meanwhile, Honda UK managing director Jean-Marc Streng admitted that the Japanese brand was “exploring” the concept of agency model sales.

The National Franchised Dealers Association (NFDA) raised its concerns about the widespread introduction of agency model car retail in its Consultation Position Paper and Response to the Competition and Markets Authority (CMA) on “Retained Vertical Agreements Block Exemption Regulation”.

At the heart of its concerns were a weakening of the inter-brand competition that, it believes, has benefited consumers by delivering better value for money.

The NFDA said that new Block Exemption rules should “work towards preserving and enhancing the benefits that consumers have experienced historically through strong intra-brand competition”.

Dale Wyatt hosting the Suzuki GB dealer conference 2021Suzuki GB head of automobile, Dale Wyatt, remains a staunch agency model sceptic.

Addressing the brand’s franchisees at its UK dealer conference, he said that car manufacturers exploring the agency model franchised car retail agreements “want to put the dealer last”.

Wyatt said: “Any manufacturer that thinks it can simply become a dealer overnight is in for a shock.”



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Comments

  • chizzy - 05/01/2022 12:44

    I don't think those respondents to the survey really understand what this means for them. Price fixing by any other means for the manufacturers, which is what they have been dreaming about for decades. Dealers will be distanced from the customer. The customer will end up arguing with faceless Customer Service teams when a problem arises. What is actually needed is for manufactures to put realistic MRSP's on their vehicles at the outset as opposed to the inflated prices that currently exist, simply to give the manufacturers negotiating room when dealing with major fleets or when they have over-produced slow selling models. Currently the retail buyer is still being hung out to dry due to the existing model - they will get taken to the cleaners with agency pricing. The manufacturers have been allowed with getting away with too much for a long time. Right now the buyer of ICE vehicles are subsidising the EV market with inflated prices, so much so that the cloak and daggers trick of raising the ICE prices makes EV's appear to be more competitively priced. We have already seen Vauxhall reduce the prices of their EV's in response to the reduction in Govt subsidy - could nobody have guessed that this would happen? Somebody is going to catch a cold pretty soon, and I don't mean of the COVID type! I'll bet it's the Retail customer, again.