Car Dealer Live

Car Dealer Live: Agency sales will become the key selling model in as little as five years’ time

Time 7:53 am, December 11, 2020

Agency selling will become the ‘key sales model’ in as little as five years as manufacturers and dealers seek to satisfy online buyers and shift more electric cars.

That’s the view of Capgemini Invent, which believes the traditional three-tier sales system will evolve into an integrated online-offline model.

This evolution will see the end of the OEM-to-dealer-to-customer model and the roll-out of a system that involves the OEM interacting with the buyer and taking responsibility for the transaction, with the dealer becoming a customer-facing agent.

The transition from the traditional sales model to an agency one will happen in as little as five years, says the Capgemini Invent – a global leader in consulting, digital transformation, technology and engineering services.

‘It’s inevitable,’ Arry Balachandran, Capgemini Invent’s senior director for UK automotive and life sciences, said on Car Dealer Live. ‘A move towards an agency model or a spectrum of different models is going to happen.

‘I think the move to online is already happening, and if you look at what customers do when they’re purchasing vehicles, the amount of work they do online is increasing over what they do physically.

‘We are going to go through a period over the next five or six years where it is further complicated by having to offer a multitude of sales models in parallel.

‘So there will be the piloting of agency models and more direct sales models alongside more traditional models, and we will see that balance shift.’

Capgemini Invent’s vice-president for automotive, Sebastian Tschodrich, added: ‘In the next two years we will see major changes across the world, Europe and the UK.

‘The sales models will operate in parallel, but within the next five to six years, with the arrival of electric and hybrid cars standing for the majority of all cars sold, we must believe that agency sales will take off and be established in the market.

‘In the next two years there will be major changes, then some phase of establishment before agency sales become the key sales model in the automotive industry.’

Agency sales models are nothing new, but new players such as Tesla, Polestar and Geely have been successful in operating an agency or direct sales model.

BMW has also been trialling the model in South Africa with the programme deemed a success.

However, the popularity of agency sales models will increase due to more electric cars being sold – electric cars let manufacturers offer a different buying and ownership process – and OEMs are looking to find efficiencies along the value chain, believes Capgemini Invent.

Some 85 per cent of dealers also feel that uniform prices across online and offline, set by the manufacturer, is the way to go

The pair were speaking after the recent publication of the company’s report into the agency sales model, having quizzed 6,000 customers and 50 dealers from China, the UK, Germany, Spain, France and Sweden.

Key findings included 95 per cent of consumers wanting a seamless, simple and efficient ordering process, 25 per cent of buyers preferring a car purchase without any dealer involvement, and 77 per cent of customers preferring fixed prices being the same online and offline.

Perhaps the most revealing part of the research was when the firm questioned dealers, with 59 per cent saying the current three-tier sales model was ‘very outdated’, 37 per cent feeling it was ‘outdated’, and two per cent each for ‘neutral’ and ‘engaging’.

Some 85 per cent of dealers also feel that uniform prices across online and offline, set by the manufacturer, is the way to go. A transparent price helps dealers to better plan predefined margins and focus on delivering better customer service.

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The research also found that 91 per cent of dealers don’t see an agency model as a threat but an opportunity to interact with customers in a more targeted way. However, data transfer between dealers and OEMs is crucial and new IT infrastructures are needed.

On the show, the pair talk about the current market picture in the UK, what customers and dealers want around the world, and why dealers shouldn’t be worried about agency sales models.

Click the video at the top of this story to watch the show

James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer. In October 2021 he became Car Dealer's associate editor.

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