Nissan GB boss Andrew Humberstone hasn’t ruled out introducing an agency sales model for his dealer network in the UK.
Speaking to Car Dealer Live in an exclusive video interview, Humberstone said that while it is ‘not on the agenda’ right now, it is something the brand would consider in the future.
Volvo has already announced it will move to an agency sales model by 2030.
Agency sales sees manufacturers sell new cars direct to consumers online while they pay their dealer partners a handling fee to hand them over.
Car dealers have generally welcomed the changes, as it removes targets, but want to ensure they are fairly compensated for their time.
Humberstone said: ‘We, as an OEM, need to look at our total cost of distribution and we need to make that as cost effective as possible.
‘If that means an agency fee model is something that could work it is something that we would consider, but it’s not something that is on our agenda today.
‘There are definitely advantages [to an agency sales model] and I think you’ll find there are a lot of people for it and a lot of people against it, the key thing is we have to have a commercially viable business case.
‘Coming back to our sense of purpose, we are here to serve our dealer network and consumers, so if it works for the dealer network then of course it is something one would consider.’
Daksh Gupta, Marshall Motor Group boss, recently told Car Dealer that the agency model was ‘nothing new’ and already something they are used to with fleet sales while Vertu Motors boss Robert Forrester said he has ‘no problem’ with agency sales.
Forrester said: ‘It all depends where all the money is. No one will argue with a handling fee as long as the handling fee is sufficient to give you the right return on capital.’
Humberstone said he knew ‘a lot of OEMs’ are looking at agency sales models and that the total cost of distribution is a ‘key thing’ for all manufacturers.
‘The retail model is arguably over 100 years old,’ added Humberstone.
‘There may be opportunities in the future, but realistically there are many many ways to skin a cat and [agency sales] may be one of the elements that are adopted.’
In a wide-ranging 20-minute interview, the Nissan GB boss also gives his opinions on whether dealers will enjoy pent-up demand when they reopen on April 12 and reveals why he thinks targets are important, even during lockdown.
Asked if he thought it was right for manufacturers to impose targets on dealers during the first quarter of this year, he said he believed it was.
He said: ‘Removing a target in its entirety is probably not a good thing.
‘It’s there to give us a sense of direction, a sense of purpose and we still need to drive the business forward.
‘But we were very flexible with these things, we were very reasonable and had a huge amount of dialogue with our dealer association and our network about how we could best work on these things together.
‘At the end of the day [targets] are meant to be a source of encouragement not a deterrent. So whilst we believe in it we were also very flexible.’
Humberstone said Nissan welcomed the agreement the UK reached with the EU.
He said: ‘We look forward to the continued success of the UK-based design, engineering and manufacturing locations that we have and have been serving Europe for over 30 years.
‘We are very glad there has been a quantum leap forward in getting this behind us so we can really focus on the future of building new products at Sunderland.
‘We have a great Built in Britain message and its something we want to communicate and share with the British public.’
He said he thought that message was ‘important’ too.
Humberstone added: ‘You’ve got a significant proportion of the population who are very passionate about that and it’s understandable. It certainly supports us and certainly doesn’t hinder us, that’s for sure.
‘It’s great that customers know that vehicles are manufactured in Sunderland and we take care of the quality and design of the product here locally.’
Ahead of showrooms reopening a week on Monday, Humberstone says he thinks the fact customers will be able to take a test drive again could boost sales.
He said: ‘With people being able to do test drives, it will add an interesting element.
‘A lot of people were ok to purchase without a test drive, but on the other hand what we have seen with conquest customers, more and more of those want to have a test drive, especially if they are shifting between brands and powertrains, or ICE and EV.’
He also said the fact a large number of PCPs end in March and April will likely boost sales too.
He said Nissan was ‘blessed’ with a good dealer network that has coped admirably with the challenges lockdowns have thrown at them in the last year.
Humberstone said: ‘We have a very competent dealer network and they have had to adapt to the changing times.
‘What we are seeing is a blended retail model, a hybrid developing and that is weighted by a mix of physical and digital. Despite the lockdown, consumers have moved to a more omni-channel solution.’
Humberstone joined Nissan just two and half months before dealers were shut by the first lockdown in 2020 and admitted it was a ‘baptism of fire’.
He said: ‘We immediately had to revert to crisis management mode. It’s been a very interesting year working very closely with the dealer network, but absolutely challenging times.
‘I think we have used the time wisely as we’ve been able to streamline our operations, our dealer network has done a lot in terms of their productivity strategies as well and have seen a significant improvement in terms of dealer profitability.
‘And now we’re in a position where are launching the right cars at the right time.’
Nissan launched the new Juke last year and is preparing to launch a refreshed Qashqai and the electric Ariya in the UK this year.
You can watch the full interview by clicking on the video at the top of this post.
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