Agency agreement information underload
13 June 2021
Mention agency agreements and everyone in the industry has a view. In the past couple of weeks, I’ve heard from a host of retailers, with views ranging from the mildly positive to the hugely negative.
We’ve been writing about agency agreements for more than a few years, but what’s changed now is that manufacturers and their national sales companies have started raising the topic with retailers.
We’ve already written about Mercedes, all the VW Group brands and Volvo moving in this direction. Plus, we’ve covered the move in other countries, such as Toyota in New Zealand and VW in Germany with the ID range.
The trouble at this point for UK retailers is that while the OEMs have told them this is their planned direction of choice, no details have been given. No retailers have yet seen an actual agency agreement (the legal contract that will govern how they sell cars), according to the NFDA.
Without such an agreement to pore over, it’s impossible to know what’s in store.
It’s all very well for the positive retailers to believe that manufacturers will always need a dealer to handle the physical aspects of the new car purchase, mainly around the test drive and servicing. However, if that comes at the cost of a reduction in profitability, then the fears are justified.
What we need is some openness from the manufacturers toward the retailers – not something that is usually in abundance.
The only solace we can offer for now is the experience of one ex-pat retailer who went through the switch from franchise to agency in his country, who now thinks they’re “not all doom and gloom”.
Auto Retail Network