Dealers have one year to ‘align’ with Alfa on agency
07 November 2021
Alfa Romeo and DS retailers will have a year to “align” with their manufacturer over agency agreements. In a rare visit to the UK, the global bosses for the two brands spoke to two thirds of the two networks about the introduction of agency agreements. The remaining third of the two Stellantis brand networks were not told about the meeting leading to retailer speculation they would be not be continuing with the brands.
A spokesman for Stellantis denied that just because some current franchise holders were not told about the meeting did not mean they would lose the franchise.
Speaking to Auto Retail Agenda after the investor event, Jean-Philippe Imparato, CEO of Alfa Romeo, explained the switch to an agency model was necessary to cut distribution costs in order to counter the rising cost of production, particularly from electrification.
Mr Imparato said: “Dealers will have to change their business model. Do not imagine for one second that the current model will be stable in the coming years. This is because if you take a B-segment car; five years ago it cost £10,000, today that’s £15,000. If you put the connectivity, the safety and the EV in, it will cost £30,000. Do you think that customers will double their wages too? No.
“We are changing the way we sell cars and we are changing in a way to absorb that cost. So the cost and way of selling cars is changing. You cannot spend 30% of your value on distribution costs anymore, it’s not possible.
“I can’t say the cost we’ll take out, but it will be significant. If you consider the total production cost and everywhere is adding in the EV costs, safety, connectivity that’s €10,000 per car, more or less you have an idea of what we have to do.”
Auto Retail Network
- Read the full story in the November issue of Auto Retail Bulletin out this week. If you’re not a subscriber, take a free trial here – and then enjoy a discounted rate
- Also see this week’s blog for more on the Alfa Romeo and DS move to an agency model