8:51 am, August 26, 2026
Agency sales have structurally changed the shape of Britain’s franchised car dealers, wiping huge sums from reported turnover, new-car stock from balance sheets and changing margins – but has it actually made them better businesses?
Three years after Mercedes-Benz and Volvo became two of the first major brands to switch to this model, Car Dealer has examined the most recent filed accounts of companies across their dealer networks, along with newer additions Mini and Honda, to find out what they had to say.
Early accounts were dominated by wariness about commission levels, volumes and whether manufacturers were taking too much control away from dealers, then came the enormous accounting changes as the first businesses stopped recognising the full price of agency cars as turnover.
Now, some of the most recent accounts are talking about improved agency margins, steadier profitability and the benefits of taking stock and funding risk away from the dealer.
Listers, in its latest accounts to March 2026, said the move from franchise to agency was the ‘most significant factor’ behind turnover falling 2.9% to £1.31bn, but also said improvements in agency-sales margins had helped strengthen overall gross margin from 14.7% to 15.1%.
Gross profit actually edged up from £197.1m to £197.4m, although pre-tax profit fell from £14.9m to £12.7m and vehicle volumes were down 1.9% across the wider multi-brand group.
At Riverside Motor Group, the effect was enormous. Its 2024 accounts estimated more than £214m of additional turnover would have been recognised had the 5,056 Volvo cars it handled under agency been treated as conventional vehicle sales, yet group pre-tax profit still rose by a third to a record £8.06m.
Reliance Garage, the company behind Ray Chapman Motors, shows just how dramatically the shape of the accounts can change. Revenue from the sale of goods fell from £175.6m to £102.3m, while agency commission income jumped from £1.3m to £8.1m.
Vertu Motors’ full-year results to February 2026 give us perhaps the clearest picture yet of what that looks like at scale, with the listed dealer group said Mini and Honda agency reduced reported new-car turnover by around £70m during the year but it handled 4,068 agency new-retail cars, up 42.9% from 2,846 a year earlier.
However, it added that agency reduced the revenue against which gross profit was measured, mechanically improving the reported percentage margin. Strip out that accounting effect and Vertu said its new-vehicle margin would actually have fallen by 0.4 percentage points year on year, while core new-car gross profit was £8.7m lower.
That same warning appears even more explicitly in the latest accounts of Holdcroft Honda, which said the improvement in its reported margin was ‘largely a mathematical result of the Honda DTC model, where turnover is reduced to a handling fee’.
Lower income, but less cost and risk
Vines Motor Group’s latest accounts put the turnover reduction from Mini agency at around £14.5m, saying the business would otherwise have recorded top-line growth.
Its experience during Mini’s first months on agency had also been difficult, with volumes below expectations.
But managing director Sean Kelly says the economics have improved considerably during 2026.
‘Mini agency has now had sufficient time to bed in and, overall, we are increasingly positive about the direction of travel,’ he told Car Dealer.
‘Volumes were initially lower than we had expected during transition, but this year are now trending ahead of the same period in 2025.’
He said: ‘The income we receive per vehicle is lower than under the wholesale model, but the cost of earning that income is also lower.
‘We no longer carry the same stock-funding burden or exposure to ageing new vehicles and tactical discounting, and the model provides much greater certainty over the return from each transaction.’
Waylands’ accounts showed the same structural change when Volvo moved direct in the UK, with new Volvo stock coming off the dealer’s balance sheet as the business stopped recognising vehicle revenue in the conventional way.
Chief executive John O’Hanlon is now clear about his verdict after three years of experience.
He told Car Dealer: ‘I think it’s fair to say that the Direct to Consumer model has worked very well for Volvo and its retailers in the UK.’
O’Hanlon said Volvo had consulted extensively with its dealer network before making the move and that close communication since then had helped it deal with some of the problems which emerged, including the need to react quickly with tactical activity in an increasingly competitive market.
He said: ‘The model has, of course, faced its challenges. Particularly in a market that has more competition than ever, a market that demands ever more timely response in terms of tactical actions.
‘By maintaining strong and trusted communications between the Brand and its retailers it has understood how to respond to marketing, logistical and commercial demands.
‘The acid test is would we go back? …and I wouldn’t.’
Volvo Car UK managing director Nicole Melillo Shaw said the manufacturer believes the model works because it better aligns the interests of the brand, dealers and customers, while insisting its dealer network remains central to the relationship.
She told Car Dealer: ‘Importantly, our Retail Network remain absolutely central to the customer journey. We haven’t replaced or diminished their role, we’ve evolved it.’
Melillo Shaw said Volvo had learned ‘a huge amount’ over the three years since making the switch, with systems and processes improving as the model matured.
She added: ‘A key focus for us is ensuring our Retailers are successful and profitable within the model.’
Mercedes went live with its UK agency model on January 1, 2023, while Volvo closed its wholesale channel in June of the same year. Mini followed in March 2025, while Honda’s latest accounts are only now beginning to show the effects of its more recent direct-sales move.
Hedin Automotive’s accounts show what the new revenue actually looks like on the page, disclosing agency commission as a line of its own – £7.3m in 2025, up from £6.7m – while total group turnover was virtually unchanged at £412.3m against £412.8m.
Cruickshank Motors, the company through which Sytner runs its Mercedes-Benz business said in its first full year under agency, to December 2024, turnover fell 8% to £765.1m, while new vehicle sales rose 43.9% to 17,184 units. Gross profit climbed 8.9% to £170.8m, and pre-tax profit went from £3.96m to £11.43m.
While almost every other dealer reported percentage margins rising under agency, Listers’ Mercedes business Falcon of Hull & Lincolnshire went the other way – down to 23.9% in the financial year to March 2026 from 25.6% – with directors saying this was ‘primarily due to a 19.6% decrease in new vehicle sales under agency agreements, which has the effect of diluting the overall gross profit margin’. Pre-tax profit fell from £4.0m to £2.3m.
Not everyone has been won over
Swansway Motor Group director Peter Smyth remains sceptical. Speaking on the Car Dealer Podcast last week, he said: ‘I still believe this was a margin grab by the OEMs, to reduce the margin that they had to give to the dealer.’
Former Volkswagen Group UK boss Paul Willis has also offered a rare view from inside the manufacturer discussions which produced agency.
Willis said he had been in the room in Ingolstadt when Volkswagen Group began putting the model together and said increasing manufacturer margins was part of the thinking behind it.
He also claimed the effect on dealers had not been properly modelled and said: ‘I don’t think it’s a viable way forward at all. And I think it erodes the entrepreneurism that dealers have.’
One this is clear, nobody is singing from the rooftops about the success of agency sales… yet. As we wait for the latest sets of accounts to arrive, will another year selling this way sway their opinions once again.