a changing business model

With the exception of the Volkswagen Group, which plays transparency in Europe and clearly states its desire to switch to an agent contract for the marketing of electrified vehicles of its various brands, manufacturers remain fairly discreet in terms of their intent and the exchanges they are currently pursuing. have with their networks and representatives.

On the occasion of the escalation of the commercialization of electrified vehicles and the digitalisation of car services, car manufacturers are tempted to topple the table and completely transform the contracts that have governed car distribution for more than twenty years. It is all framed at European level by a set of rules, which will also be called into question by the European Commission for Sales and After-Sales in 2023.

The debate is central to the future of distribution groups, whose structures have evolved strongly over the last twenty years during the momentum of multi-branding within a group, as well as the effects of the concentration of investors that have affected car distribution over the last ten years. year..

The premium is primarily affected by agent contracts

“As far as we know, it is primarily the premium that is affected by these changes.explain to us Anthony Magat, automotive retail specialist at Jato. We can say that Mercedes, Volvo, Alfa Romeo, Lancia, Jeep, Fiat Professional and Iveco will switch to an agent contract with lighter standards. This means that dealers no longer buy the cars, the demo car belongs to the manufacturer and the distributor will receive a commission ». And to add: “At the moment we do not have a clear vision, but it seems clear that manufacturers want to take back control of customer data and their new car buying process, both in terms of financing and after-sales. It also means dealing with discounts and margins while preparing for the change in procurement from physical to phygital and then to digital. “.

Agent or commission contract: the big fluctuation

Although its sales volumes are masked by the semiconductor crisis in Europe, Tesla both fascinates and fascinates many manufacturers. It seems that the agility of its distribution model gives them ideas

In October 2021, an event did not go unnoticed. With a market valuation of Tesla of up to $ 1000 billion, the American manufacturer is shaking up the entire automotive industry. Should we make Tesla the only source of inspiration? With the agent or commission contract, the car dealer is entitled to ask questions about the valuation of his business.

“Manufacturers seek to standardize contracts through the agent structure and facilitate investment in distributors to manage and store customer information and needs at home through a geographic platform to deliver cars with the help of ‘ingenious people’ in the showrooms,” explains Antoine Magat, automotive retail specialist at JATO. “The first decisions have already been made for some manufacturers in Europe. Keep in mind that in the UK, FORD will cancel between 160 and 180 dealers (out of a total of 400) by 2025, because the economic model is no longer profitable for dealers while in Spain is 39% of Stellantis dealers have been laid off “.

Inventory porting, invoicing and fixed price: questions about new contracts

By becoming an agent, the distributor no longer carries NV stock financing. In some cases, he no longer invoices the end customer but receives an agent commission, it is the developer who invoices the buyer directly. A new contract where the price of the vehicle is also more or less fixed, which will prevent the distributor (or the new agent) from affecting the discount usually given to the end customer. Finally, keep in mind that the agent contract would potentially pave the way for direct sales from the manufacturer. So many changes in the business model that the distributor should absorb in its financial equation in the coming years.

The outlines of these various new contracts are still unclear … It must also be seen whether they will be valid in the eyes of the European Commission when BER for car sales and after-sales is to be renewed.

After-sales: the big unknown

These new car distribution contracts do not currently open the way for a question of after-sales contracts. Remember that in a classic distribution contract, the two activities were closely linked for one distributor. Will the agent or commission contract question this activity in the fire networks. Professionals rather expect a status quo on this page. However, the recent agreement between Stellantis and the Feu Vert network on the supply of spare parts raises some questions … It could actually pave the way for an intervention by independent networks in the after-sales service of electrified vehicles.

All of these themes will be on the agenda for the next #CONNECT Distribution in La Baule on November 18 and 19, 2021. It’s not too late to attend and come and discuss with distributors and experts. To sign up, just follow this link.

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