The agency model encourages ‘thinking differently’ at car dealers

There has been no shortage of innovation in the automotive industry in recent years: from electrification to connected cars and from mobility as a service to self-driving vehicles. All these changes also affect the dealers, who will increasingly act as the manufacturer’s agents. Martin and Ronald van Eck of MSR Consulting Group advise retailers to respond to these developments in good time.

At first glance, the many technological leaps in the car industry may only seem relevant to the manufacturers. After all, they have to stay ahead of the competition and comply with the increasingly strict sustainability laws. The dealers just have to sell the cars, just like they used to. However?

Martin and Ronald van Eck, co-owners of MSR Consulting Group, know that the reality is very different. Take, for example, the advent of electric vehicles, which has a significant impact on the aftermarket.

“Electric cars require less regular maintenance and fewer repairs, but they require new service concepts, such as advice and support with charging infrastructure,” explains Martin. “For (electric) commercial vehicles, the goal will be to achieve 100% uptime. It requires preventive maintenance – the car itself tells you in good time what is about to break or what needs to be done.”

Also read: Business mobility: ‘There are plenty of options, but flexibility is required’.

In addition to challenges, this also provides opportunities, but to seize them you need to make timely adjustments. “You have to adapt your entire service concept to that,” says Ronald. “MaaS will ultimately lead to fewer new sales at retailers. The established parties must react quickly, otherwise tech companies will take the lead.”

The agency model

According to MSR Consulting Group, a lot will change in the next ten years – especially for retailers. The relationship between the manufacturer and the retailer will also be reviewed significantly. For example, the manufacturers will switch to the so-called agency model, where the dealers act as agents for the brand and receive a commission for each car sold.

“With the agency, manufacturers want to be able to respond better to the aforementioned trends and reduce distribution costs,” explains Martin. “It’s an important change. The manufacturer formally has the customer relationship and determines the price.”

It also affects aspects such as trading in the old car, where the familiar negotiation also seems to disappear.

“In the past, the question was always what part of the trade-in value consisted of the real value of the trade-in car and the part of the notional discount on the new car,” explains Ronald. “Soon, the car will be ordered online, and negotiation will no longer be an option: The new car has its fixed price, and the importer can also make an online exchange offer for the old car. That is it.”

This also means that the purchase of used cars partly falls into the hands of the importer. “The question is what percentage of new car sales will go through the importer and how much will go through the local agent anyway”, says Ronald.

Opportunities to do business

Many retailers view the rise of the agency model with suspicion, but according to Martin, it also creates many new opportunities. “The new stock is no longer from the dealers. It therefore leaves much more room for other investments – for example in used cars. The risk for the dealer also decreases because the agent receives a fee per car.”

“The future agent’s great added value is and will remain his local market knowledge.”

But in order to seize such opportunities, he emphasizes, it is crucial not to begrudgingly wait for future expectations, but to react to them in good time. MSR Consulting Group supports customers with this.

“We help to look further ahead”, says Martin. “How do you feel now? What do these concepts mean to you and how can you as a retailer react to them? The challenge is and will be to maintain the relationship and loyalty with the customer.”

According to Ronald, retailers retain an important advantage in this challenge. “The future agent’s great added value is and will remain his local market knowledge”, he emphasizes.

It is important that reseller companies are prepared to invest in solutions. “They need to automate processes and expand their knowledge to keep up with technological developments,” explains Martin.

Those who act in time can “continue to play a critical role” in this rapidly changing market, Ronald says. “But then, as a dealer, you have to offer sufficient added value. We help companies set new standards in time. It is certain that the change will come. How you handle it – that’s up to you.”

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