7:39 am, July 19, 2023
Some 18 car manufacturers have – or soon will be – moving to fixed-price, no-haggle agency sales agreements with their partners, an exclusive Car Dealer Magazine investigation can reveal.
Mini, Skoda, Smart and Genesis will all swap to so-called ‘agency sales’ within the next six months, while BMW will follow suit in 2026.
We asked 47 car brands operating in the UK the simple question: When will you move to agency sales?
Many found that very hard to answer. Only EIGHT car manufacturers categorically ruled out moving to agency completely.
21 car manufacturers either failed to comment on their plans to move to agency sales or chose not to issue a statement to Car Dealer.
Agency sales sees car manufacturers sell vehicles directly to consumers via their own websites with dealerships paid a handling fee to deliver the cars.
Car makers claim consumers want to pay fixed prices and take away the hassle of haggling.
Mercedes switched to agency sales at the start of the year. Recently boss Gary Savage spoke to Car Dealer to defend its progress, which many in the industry claim is failing. Meanwhile, Volvo switched to agency sales in June.
David Kendrick, CEO of accountancy UHY Hacker Young, said: ‘It is no surprise that you have 18 car makers stating they are moving to agency and a number of those will no doubt be known by the market already.
‘The ones who chose to not give comment is also interesting and suggests they either don’t want to announce they are planning it, due to the implications or reaction it may create, or they are watching the fall out from the others before implementing it.
‘It’s certainly creating a lot of noise, uncertainty and dissatisfaction from the dealers we are speaking to.’
Our research reveals agency plans are afoot among some of the biggest brands in the UK. Of those that responded to our requests for comment, several issued statements which are included in full at the bottom of this story.
The VW Group – responding on behalf of Audi, Skoda, Cupra, VW Commercial Vehicles and VW passenger cars – said Skoda will be the first of its brands to switch to agency sales later this year. It did not reply on behalf of Seat and no further clarification was given as it its plans for that brand.
The VW Group said its other brands would follow Skoda’s suit ‘later’. When pressed it would not reveal when.
Car Dealer reported earlier this year the agency sales roll out for the VW Group had been set-back by system issues.
The delays at VW followed similar issues reported at Stellantis, which told dealers it would be holding off on its agency sales introduction until late 2024 in a memo issued in November.
Our latest investigation also reveals Stellantis is planning to switch Alfa Romeo and DS to agency sales in 2024. Its official line for the other car brands following their lead is ‘not at present’. When pushed, a spokesperson wouldn’t comment further.
Spokespeople for Renault, Dacia and Alpine were among those that failed to respond to our requests for comment.
Ford, Hyundai, Mazda, Porsche and Suzuki also failed to reply – albeit the latter’s boss, Dale Wyatt, has been vocal in his dislike for agency sales, and Mazda told Car Dealer earlier this year it wasn’t planning on introducing agency sales ‘for the foreseeable future’.
Despite the silence, Car Dealer has already reported on news Ford is putting the finishing touches to its own agency sales agreements.
Claire Evans, consumer editor at What Car?, said: ‘Agency sales are a double-edged sword for car buyers. While some people will welcome the demise of haggling in favour of transparent pricing, losing out on discounts takes the shine off those haggle-free prices.
‘When we spoke to sales staff in Mercedes showrooms soon after its switch to agency, there were concerns about sales dropping due to fewer discounts and sadness at the demise of haggling by some, which was seen as part of the fun of the job.’
- Are the car makers telling the truth? Do you know something we don’t? You can email us under promise of anonymity to tip us off here
Steve Young, managing director of research group ICDP, said car makers need to understand dealers play a ‘critical role’ in the car sales process.
He added: ‘Your survey shows that even on the basis of the manufacturers who have shown their hand so far, the trend towards agency is well-established.
‘We know from the implementations in other markets that the path is not always smooth, but we do not expect that even with some setbacks, any manufacturers will do more than adjust the timing, and potentially alter some elements of their planned processes and IT.
‘What will be critical to as smooth a transition as possible is that the manufacturers recognise the critical role that dealers play in the retail process.’
Mike Jones, industry consultant, added: ‘We are in the early stages of implementation, however the results to date have not put off the brands looking to move to agency, as can be seen from your research.
‘To be a success it requires great, integrated IT systems alongside a brand which has to be much more dynamic in their price proposition than has historically been the case – they need to sell cars rather than just market them.’
Car manufacturer statements in full
BMW / Mini
In close partnership with its retail partners, the BMW Group always aims to offer the best premium customer experience. In the context of rapidly changing customer expectations and the options and opportunities of increasing digitisation, the company will in the future focus on direct sales with agents acting as its sales representatives in Europe.
The implementation of this agency model will start in 2024 within the European Mini network, with the BMW brand joining in 2026.
As part of this new model, the company’s existing retail partners will remain the principal touch-point for customers and will focus on providing them with advice and support. In return, these ‘agents’ will receive a commission for their services.
In future, the BMW Group will assume a significant part of the risks and costs of selling the cars and take full advantage of the technical opportunities offered by the constant evolution of digitalisation, offering customers to move seamlessly between a digital and physical sales experience. The offer, including pricing, will be consistent and transparent across all sales channels.
Ferrari
Ferrari currently has no plans to move to agency sales. We strongly believe in the added value that our dealer partners can offer in managing the customer experience with the brand.
Honda
Honda UK will be offering online sales towards the end of this year. Initially, we will only offer the new e:Ny1 EV online (as well as in store so customers can do as little or as much as they want online) to test the process.
We will make sure the online proposition delivers in terms of a strong customer experience and then potentially review making the rest of the Honda range available online as well.
Our retailers will continue to play a critical role in delivering a personalised customer experience that is truly omnichannel, and we currently have no intention of moving to a full agency solution.
We expect predominantly an omnichannel approach where customers use a combination of online and instore to make their purchase.
So, for example, customers could start their research online, they could then go into the dealership to take a test drive and complete the sale online in the dealership, or they could complete the sale online at home.
Kia
Kia enjoys a mutually beneficial relationship with its national dealership partners, which is supporting the growth of the brand in the UK. We are committed to this approach and have no plans to change to an agency model.
Maserati
We are monitoring the industry situation, but have no current plans to switch to an agency model in the UK, as we are very happy with the service and quality of our retail partners.
MG
We have NO plans at all to switch to agency.
Nissan
As an OEM we need to look at the total cost of distribution, to make that as cost effective as possible, and really focus on engaging with our customers and delivering an enhanced experience.
If an agency fee model is something that could work, then of course it’s something we could consider – the key point, however, is we need to have a commercially viable business case both for us and for our partners.
Our priority remains on our partnerships with dealers, the need to deliver viable ROS and building a strong business for the future.
Polestar
We launched the Polestar brand with a direct to consumer business model through a service partner set-up and continue with this structure.
Stellantis
The car brands that go to agency are DS Automobiles and Alfa Romeo – both of these in 2024. No others at present. The LCVs for Vauxhall, Peugeot, Citroen and Fiat also go to agency in 2024.
Smart
The new Smart joint venture will launch with an agency model in the UK, with sales of the #1 commencing this summer. This has been implemented with the full support of our retailer network.
Toyota & Lexus
There are, currently, no plans to switch to an agency model. In fact, the transformation of our current business model has retailers at the centre of it.
Lamborghini
Lamborghini is not planning to switch to agency sales.
VW Group
(Replying on behalf of Audi, Skoda, Cupra, VW Commercial Vehicles and VW)
Our industry – and hence our organisation – is in a process of transformation as we prepare for a future which is set up to even better serve our customers and their evolving mobility requirements.
As part of this journey, BEV Agency (in other words, selling electric vehicles to customers under an agency retail model) was successfully launched in Germany for the Volkswagen Passenger Car brand in 2020. Cupra has also been using an agency retail model for its Born EV in the UK since November 2022.
Our latest rollout schedule would see Skoda implementing an agency retail model for its electric vehicles in the second half of this year, with other brands (Volkswagen Passenger Cars and Volkswagen Commercial Vehicles and Audi) following later.
Are the car makers telling the truth? Do you know something we don’t? You can email us under promise of anonymity to tip us off here
