However, not all automakers are convinced it is the right decision to move to an agency model, which makes the dealer an ‘agent’ rather than the wholesale buyer of cars. The traditional system gives the dealer freedom to apply discounts and set the final price, while in the agency model, the final price is fixed by the automaker.
“We decided to stay with dealer network contracts and capitalize on a very valuable asset,” said Raffaele Fusilli, CEO Renault Italy, including Dacia. Renault will keep the wholesale model across Europe for the foreseeable future.
Switching now was a change too far in turbulent times with the move to electrification and autonomous driving, as well as during pressures such as supply-chain disruption and rising commodity costs, Renault believes.
“We do not need another stress test in the system,” Fusilli said.
Fusilli said fixed pricing and the end of haggling for discounts was not unique to the agency model.
“Dacia is fixed price and Renault can go same way according to the dealer contract,” he said. “There are different ways to reach the same targets.”
The traditional set-up of the wholesale retail model encouraged discounting and distress selling of cars as dealers sacrificed margins to chase aggressive targets, something that should not be allowed to happen again, Fusilli warned. “Dealers cannot anymore go back to push model,” he said.
“We cannot sell 20 percent more than what the real market asks for.” Dealers will buy stock as well as taking factory orders, but levels should be well down on pre-pandemic levels. Fusilli called for the end of dealers registering cars to themselves to boost their end-of-quarter targets.
Davino said the discomfort felt by dealers at switching to a different model is a positive energy. “With uncomfortable change there comes fresh air,” she said. The key was pitching it correctly to dealers. “When we propose the same profit with a different risk profile, we find a lot of interest in this.”
The difference for the customer will be seen in the approach to sales, which requires a new way of thinking, all the panelists agreed. Customers enjoy getting the same prices and level of communication online as they receive at the dealer.
Von Kleinsorgen said: “You will not need to ask the same question at different phases and get different answers.”
Fusilli said sales staff will now need to be less traditional salespeople and move more toward being product experts, something that is more possible than under the current system, Fusilli said. The key is finding the right people. “It’s not just training, you a need young mindset: young people who think differently from management,” he said.
Davino said automakers’ direct interaction with customers will bring rewards. “What is more profitable and more sustainable and more sexy as a return on investment than satisfied customers?” she said.