a changing business model

With the exception of the Volkswagen Group, which plays transparency in Europe and clearly announces its desire to switch to an agency contract for the marketing of electrified vehicles of its various brands, the manufacturers remain quite discreet about their intention and the exchanges that they currently have with their networks and representatives.

On the occasion of the escalation of the commercialization of electrified vehicles and the digitization of car services, the car manufacturers are tempted to overturn 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 that will also be called into question by the European Commission for sales and aftersales in 2023.

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

The premium is primarily influenced by agency 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 agency contract with lighter standards. This means that the dealers no longer buy the cars, the demobile belongs to the manufacturer and the dealer gets a commission ». And to add: “At the moment we don’t 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 aftersales. This also means dealing with discounts and margins while preparing for the change in procurement from physical to phygital and then to digital.”.

Agency or commission contract: the big swing

Although its sales volume is masked by the semiconductor crisis in Europe, Tesla both fascinates and fascinates many manufacturers. It seems the flexibility of its distribution model is giving them ideas

In October 2021, an event did not go unnoticed. With a market valuation of Tesla of up to 1000 billion dollars, the American manufacturer is shaking up the entire automotive industry. Should we make Tesla the only source of inspiration? With the agency 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 easier investments in distributors to manage and store customer information and needs at home through a geographic platform to deliver cars with the help of “genius people” in the showrooms,” explains Antoine Magat, automotive industry. retail specialist at JATO. “The first decisions have already been made for certain manufacturers in Europe. It should be remembered that in the UK FORD will cancel between 160 and 180 dealers (out of a total of 400) until 2025 because the economic model is no longer profitable for the dealers, while 39% of Stellantis dealers in Spain have been made redundant”.

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

By becoming an agent, the distributor no longer carries NV warehouse financing. In some cases, he no longer invoices the end customer but receives an agent’s commission, it is the builder 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 new agent) from influencing the discount normally given to the end customer. Finally, remember that the agency contract would potentially open 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 contours of these various new contracts are still unclear… It also remains to be seen whether they will be valid in the eyes of the European Commission when the BER is renewed for car sales and aftersales.

Aftersales: the great unknown

These new contracts regarding car distribution do not currently open the way for an issue of aftersales contracts. Remember that in a classic distribution contract the two activities were closely linked for a distributor. Will the agent or commission contract question this activity in the brand networks. Rather, professionals expect a status quo on this side. However, the recent agreement between Stellantis and the Feu Vert network for the supply of spare parts raises some questions… It could actually pave the way for an intervention by independent networks in the aftermarket of electrified vehicles.

All these themes will be on the program for the next #CONNECT Distribution in La Baule on 18 and 19 November 2021. It is not too late to participate and come and discuss with distributors and experts. To sign up, simply follow this link.

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