11:52 am, April 11, 2023
Car buyers would prefer to purchase their next car directly from the manufacturer with fixed prices rather than from a traditional car dealer, new research has found.
What Car? quizzed 1,221 in-market car buyers and found 55.4 per cent of them would rather transact with a dealership operating under an agency agreement.
A fixed price model – a key component of agency sales – was seen as more appealing than haggling and shopping around, the survey found.
The same percentage were in favour of manufacturers moving to an agency model in the future – which would see standardised prices introduced across new cars.
Just 24.6 per cent of respondents stated they actively enjoy haggling, while the rest either dislike it, accept it as part of the buying process, or never do it.
However, What Car? said there is little evidence of a seismic change in consumer attitudes as a similar research carried out in January 2022 found 57.5 per cent of buyers wanted to transact via an agency model.
Mercedes-Benz introduced agency sales for its UK dealers on January 1 this year, but the subject has proved a thorny one for other carmakers.
Some such as Stellantis have delayed plans to introduce agency sales, while others have declared they’re not considering a switch.
MG Motor UK commercial director, Guy Pigounakis, said he believes many agency models will fail because of manufacturer arrogance.
He told last month’s Car Dealer Live conference: ‘‘I do think it’s a margin grab and I don’t think manufacturers realise the depth of job and commitment dealers have, especially in the aftersales arena.
‘I think as long as manufacturers are arrogant enough to think that way, I think the agency models I’ve seen by and large will fail.’
Suzuki UK boss Dale Wyatt told the conference: As [Suzuki is] an established manufacturer, if I’m serious about agency then I need to fire my management team. Fire me and hire Daksh Gupta – because I’m not a retailer.
‘I’ve got to change all of my processes. I’ve got a huge investment in IT and a cultural change to oversee, with the punishing implications of taking on all of the stock. It’s not for me.’
At the conference the two bosses agreed Polestar was striking the right balance between giving what consumers want and a sales arrangement working for dealers.
Polestar UK’s chief Jonathan Goodman told conference delegates: ‘Agency is a word that our friends in the media glibly use to label a whole range of agreements. We set up our business as a service provider agreement rather than an agency agreement.
‘There are two key tenets. One was that our partners make money, and that was fundamental.
‘Secondly, that we as a new brand control the relationship with the customer but it is a partnership, and I think everyone keeps trying to paint this as black or white.’
He added: ‘The advantage it gives me as a manufacturer is that if something goes wrong I hear about it straight away. But we’re a smaller brand and I fully accept that. We will expand though but as we grow the volume.
‘I think we’ve got the balance absolutely right but I don’t wholesale the dealers with stock. I don’t issue them with a sales target.’
Commenting on the What Car? research, editor Steve Huntingford said: ‘Our latest research highlights that a slightly higher percentage of customers still prefer the agency model over traditional dealers, with fixed prices seen as a more convenient way to purchase a vehicle.
‘However, the fact that despite more than 12 months of progress, a near identical share of buyers still prefer the agency model, suggests that the traditional forecourt will remain a part of the UK automotive landscape for some time.’
Car Dealer Live, sponsored by Auto Trader, will be back on March 7, 2024. Tickets are available to purchase now at discounted early bird rates at CarDealerLive.co.uk.
