1:17 pm, March 13, 2025
It feels like in the past 12 months, every carmaker in the UK has turned its back on agency sales after failing to make the model work.
However, for a small handful of brands, the change of approach has proved to be a roaring success, leading to record turnover and sky-high sales.
Among those to benefit hugely from the switch has been Volvo, which launched its ‘direct’ model back in 2023.
Now, almost two years on, the Swedish brand has just enjoyed it’s best February since 1997 and UK boss Nicole Melillo Shaw is clear that agency has more than played its part.
In a keynote interview at Car Dealer Live, she told host James Batchelor: ‘The one question that people ask me is usually about the agency model – or the direct model as we call it.
‘For us, being able to get closer to consumers is really really important and we’re on that journey.
‘With the huge transformation that we’ve done, it’s inevitable that there has been some turbulence as we moved from A to B.
‘We’re definitely through that now and last year we had record results. We have opened more channels, we have launched new cars, but to do that in the midst of massive constellation is really testament to the relationship with our network partners.’
‘Consumers love transparent pricing’
One of the biggest complaints from dealers around agency has been concerns over not being able to get customers the best deal.
However, in Volvo’s case, Melillo Shaw says that the change has actually been warmly received by retailers and customers alike.
She said that the decision has removed ‘post-purchase anxiety’ from customers, who now feel reassured that they have got the best price possible.
‘For us, we really wanted to enhance the consumer experience, and genuinely, we went into it with a lot of assumptions, some of which have proven true and some untrue. The one thing that’s been consistently true is that consumers, buyers, shoppers, they love the transparent pricing, she said on stage at the British Motor Museum.
‘That was a nervousness from our network around getting people the best deal but actually we found that was an anxiety that people had.
‘One of the reasons that we went into the model in the first place was to offer a premium experience where you don’t go round back and have a conversation about a deal, certainly not on new cars anyway.
‘It’s very transparent and they know that after they’ve bought that car, they’ve got the right price for it. There’s not that post-purchase anxiety around “Was my neighbour better at negotiating and therefore give up the better deal?”
‘I think as we’ve moved forward now, we’ve really understood some of the benefits of that direct model and the network tell me continually that they would not go back.
‘There was a conversation earlier around genuine and non-genuine agency, which as a term, obviously is not ideal, but I think actually what we’ve seen is that it really, really is working.
‘It is working for our network explosion, for our consumers and for us as an OEM. Testament to that would be those partners that have been with us along that journey, some who have expanded us as well.
‘You don’t go expand if there’s an issue so without sounding defensive I am really proud of what we’ve achieved.’
‘We’ve really done things in a courageous way’
Given how Volvo has made such a success of agency sale, talk inevitably turned to why so many other brands have failed to replicate the approach.
Melillo Shaw said that making the model work has required Volvo to be ‘brave and bold’, while taking a ‘courageous’ approach.
When asked whether she is surprised at other brands’ failure, she replied: ‘Yes and no. I think Volvo has always been quite brave and bold.
‘We launched the three-point seatbelt many, many years ago, which we could have kept ourselves and we didn’t – we put it out for every market to copy.
‘We’ve really done things in a courageous way and it doesn’t surprise me that it [agency] doesn’t work at first.
‘Obviously the point will be launched, and the relative market dynamics to where we are now, that has to play a role. You can’t get away from that.
‘I do think it will come back as well. When it is for everyone to work out but I’m just pleased that we’ve done it. By the time that happens, we’ll be in years four, five and six.’
