| Look at the creep of the agency model in the European market |
The conversation around the controversial direct selling model is resurfacing, showing automakers’ willingness to drive the retail process more as the market for new vehicle sales evolves. Parts of a revamped sales model could benefit dealers and the industry, but dealers should be wary of giving automakers too much control.
Last month, Mercedes-Benz announced it would cut 15-20% of its dealerships in Germany and around 10% globally in favor of a more direct sales model, where the automaker sets the price and dealers deliver the vehicle to the customer for a commission. .
Other automakers, including Volkswagen and Stellantis, are also experimenting with the agency model in Europe.
The change may be indicative of the true desires of automakers globally. Manufacturers have long tried to further influence the retail model in various ways, such as demanding costly facility upgrades from dealers or publicly shaming dealers who flex their pricing power. Dealers should be aware of changes that significantly impact their business and restrict their independence. Retailers accepting an agency model should be aware of potential changes to delivery charges. Those who remain independent, renouncing an agency model, should be wary of the punishment of attribution.
Mercedes-Benz has confirmed there are no dealer consolidation plans in the United States
State franchise laws prohibit traditional automakers from launching direct sales in the United States. Yet the line between dealerships and automakers as sales agent has become more blurred as many dealerships become dependent on orders and reservations during the inventory shortage. Rather than helping customers select a vehicle from the lot, dealerships took on the role of online ordering concierge, delivery valet, and eventually service center.
Especially as automakers roll out expensive electric vehicles, greater control over the sales process has obvious appeal for automakers. A fixed price prevents dealers from abusing, although some dealers continue to apply price adjustments despite stern warnings from automakers. It also prevents dealers from driving down a vehicle’s value with strong incentives.
For now, franchise laws protect the business practices of US dealers. But if automakers find success with a direct model elsewhere, expect them to try to replicate it everywhere.
We have a page 1 this week on how some states are revising their franchise laws. This is when car manufacturers start introducing new technologies and practices, such as live updates and vehicle reservations. Some state dealer associations support franchise legislation that includes provisions addressing these emerging areas.
— Hannah Lutz
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“The immense technical challenges involved in manufacturing a modern Formula 1 powertrain suitable for everyday use on the road have undoubtedly pushed us to our limits.” |
– MERCEDES-AMG PRESIDENT PHILIPP SCHIEMER IN A STATEMENT ON MERCEDES-AMG ONE HYPERCAR DEVELOPMENT TESTING |
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Of “Mercedes-AMG One brings F1 technology to the road for a price: $2.7 million” |
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In Mondays Automotive News:
The electric future of Lexus: Lexus’ polarizing pin grille – derided as Darth Vader’s death mask by some reviewers – gets a facelift for a nicer, softer look thanks to the brand’s move to electrification. The makeover is already underway, with the new all-electric RZ crossover unveiled in April and the redesigned RX soon to arrive – the best-selling family hauler crushing the premium mid-size crossover segment. The next-generation RX will take Lexus further into electrification, with the nameplate’s first plug-in hybrid as well as a fire-breathing F Sport turbocharged hybrid.
And that of Buick too! Buick plans to stop selling gas-powered vehicles in North America by the end of the decade and will launch a full line of electric vehicles, reviving the Electra name from its heyday. The brand plans to go all-electric in about the same time frame as Cadillac, bringing General Motors closer to its goal of having all light vehicles it sells fully electric by 2035. Buick boss Duncan Aldred explains the plans to us.
The headlines of the weekend
Musk’s recession warning seen as a ‘canary in the coal mine’: Tesla CEO Elon Musk’s warning is the first strong and public dissent in a united auto industry stance that underlying demand for cars and trucks remains strong despite two years of a global pandemic.
Magna is making the transition from drivetrain to electric vehicles – with care: Magna International is focusing its research and development efforts on electric and hybrid vehicle projects as it strives to balance small but growing parts volumes for next-generation vehicles with demand for its “traditional” product line. “.
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Surprise! Volkswagen’s announcement of plans to build a Scout-branded SUV and pickup truck in the United States has shaken relations between VW and many of its US dealerships. But Scott Keogh, CEO of Volkswagen Group of America, believes the VW brand has been in the best position for a long, long time.
Musk has had enough: Elon Musk is tired of this whole work-from-home business. The Tesla CEO emailed “everyone” at his electric vehicle business last week, elaborating on an earlier missive to executive staff about the need to be in the office. “Everyone at Tesla is required to spend at least 40 hours in the office per week,” Musk wrote in an email titled “To be very clear.” “If you don’t show up, we’ll assume you quit.”
More money for Rimac: The Rimac Group has raised an additional $536.6 million to help build future Porsches, Bugattis and Koenigseggs. SoftBank Vision Fund 2 and Goldman Sachs Asset Management led the latest round of funding, which also included shareholders of Rimac, Investindustrial and Porsche. Mate Rimac, who founded his eponymous company in a garage in 2009, remains the largest shareholder.
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A selection of Shift and Daily Drive:
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June 6, 2012: Autoliv agrees to pay a $14.5 million fine over allegations that it conspired to fix the prices of seatbelts, airbags and steering wheels installed in US vehicles for an unidentified automaker, and allegations that he conspired to fix seat belt prices for another. The plea deal is the first to show that a multinational investigation into price-fixing and bid-rigging in the automotive supply chain dating back to at least February 2010 had spread to occupant safety systems.
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