Sytner chief executive Darren Edwards has expressed his concern at manufacturers moving towards agency sales models.
In an exclusive interview with Car Dealer, the boss of the second most profitable group in the UK said agency sales are in danger of curbing the ‘entrepreneurial spirit’ of dealers.
Writing for Car Dealer today, Edwards says he fears agency sales could have ‘unintended consequences’ for the industry.
The Sytner boss spoke out following news the VW Group is planning on introducing an agency sales model for its electric cars across all its brands.
Agency models see sales taken over by the manufacturer on its own website with car dealers paid a handling fee for handing cars over.
Edwards said high performing dealer group’s like Sytner have blazed a trail for manufacturers to follow as ‘best practice’ and agency sales could kill off that fighting spirit.
He told Car Dealer: ‘For me, the problem is the propensity for it just to become a very average distribution business and then innovation stops from a dealer point of view.
‘It’s then left for manufacturers to come up with new ways to innovate, market and find ways to get cars to customers.
‘Unfortunately, it hasn’t always been the case that that’s what they’re best at.’
Leading the way
Edwards said it was the car dealers that led the way during the coronavirus crisis to find a way to continue to sell cars – be that online or via click and collect.
He said that while most manufacturer teams were on furlough, car dealers innovated with their online systems to continue to do business ‘in the space of weeks’.
‘I think it’s that sort of innovation that happens at dealer level that drives sales,’ he said. ‘That could potentially go missing.’
Edwards says it will be very difficult for manufacturers to make the agency sales model fair too, as sales are likely to be allocated to the nearest dealer.
He said: ‘I guess if the manufacturer is just doing that at national level then it will just be all about where you are, rather than what you do.
‘If you’re a smaller dealer that’s been entrepreneurial over the years you might suffer, while a larger dealer that’s perhaps underperformed could benefit.
‘It doesn’t necessarily reward historical performance the way franchise models do.’
Sytner is the largest Audi franchise holder in the UK and has VW, Skoda and Seat dealers too.
The group has an enviable portfolio of luxury brands including Ferrari, Porsche and Jaguar Land Rover.
Edwards said: ‘We’re certainly very interested in how this is going to work and clearly we’ve got a loud voice to make it very prominent.
‘We’ve invested hundreds of millions in these brands on the basis of it being franchised, so if it’s now going to change to agency we want to make sure it’s going to work for us.
‘Other people in that upper-quartile minority will be saying the same thing.
‘That’s the problem with this, it’s based on average. By the very nature of that it means the people who are average or below will be happy with it, but the people who are above average are not going to be happy.
‘We’re certainly concerned and we want to make sure that we put all of those points forward.
‘I particularly want to know how high or over performance will be rewarded.’
Sytner was the second most profitable dealer group in the UK according to the Car Dealer Top 100.
It made EBITDA profit of £152.4m on revenue of £5.92bn in 2019.