Car makers push back against dealership agency model plans

Car manufacturers may be re-thinking plans to transition their retail networks to an agency model, according to new reports from Cox Automotive.

In recent weeks, rumours have surfaced that BMW is making plans to delay the implementation of agency for Mini in the UK by six months. Mini was due to be the first of its marques to implement agency in 2024, with BMW due to roll it out in 2026.

Cox Automotive reports that the Mini plans have seemingly been pushed back to 2025. Lotus, meanwhile, is reportedly reversing on its introduction of the model.

Philip Nothard, insight director at Cox Automotive, said: “The apparent reversals on the part of some OEMs suggest that the model is still a work in progress. Although not a major player in terms of market share, Lotus’ apparent change of heart is incredibly significant and could trigger more negativity about the agency model.

The agency model is a distribution strategy where the OEM is the legal and primary seller of vehicles to the consumer, with the dealer acting as an ‘agent’ for the OEM in selling and servicing vehicles. For a number of brands, including VW Group, fleet sales are already processed via an agency model.

Key characteristics of agency, in its purest form, include OEM vehicle ownership as well as their control over national pricing.

Dale Wyatt, director of Suzuki, UK and Ireland, has reiterated his opposition to the agency model and what he sees as the negative impact it could have on the industry. He warns that OEMs underestimate the value of dealers at their peril.

Writing in Cox Automotive’s Insight Report, Wyatt said: “Some manufacturers view the dealer as a cost. And they want to use agency to effect a knowledge and relationship transfer. I think some manufacturers underestimate the value that the dealer brings. They see the dealer as almost a supplier, a service provider, or a subcontractor rather than a partner.“ 

While some experts say agency will be a positive development for automotive, making for greater efficiency and profits, others say its adoption will have a major impact on some dealerships, including a reduction in revenues.

“The dealer is the physical embodiment of the brand,” Wyatt explained. “Whatever promise the brand makes is either undermined or built on during first contact between the consumer and the dealer. The front line determines the bottom line.” 

Nothard insists that for agency to work, in whatever form it takes, there has to be closer collaboration and support, especially as dealers need assurances to succeed in any new sales environment.

He added: “The outcome of that collaboration has to be a triple win in that there’s an upside for the OEM, the dealer and, of course, the customer. If one is negatively impacted, then everyone else will be too."