Car dealerships have a lot to worry about. They have to both deal with sales of new cars which risk vegetating for the third consecutive year at a historically low level, but also face up to the desire of certain manufacturers to overhaul their distribution contracts, in a way that would not necessarily be favorable to them.
Most manufacturers intend to take advantage of a change in regulations at European level, the guidelines of which should be finalized in the coming weeks. On this occasion, they want to move the distributors from the status of dealer to that of agent. This will obviously have repercussions for the main stakeholders, but also for customers.
Who sets the discount level
Under the current system, dealers buy new cars from the manufacturer, which allows the latter to have part of its stock financed by third parties. In return, the dealer sets the selling price, and can therefore choose to increase the discounts on a model that does not sell. In fact, the prices are however largely dependent on “commercial means”, these discounts on the catalog price authorized by the brands and then reimbursed to the seller.
This model is considered ineffective by the boss of Stellantis, Carlos Tavares. The latter brutally put his foot in the dish by denouncing in May 2021, with two years’ notice, the contracts of all the group’s distributors in Europe for its 14 brands (Peugeot, Fiat, Citroën, Jeep, etc.).
Establish a more direct relationship
The current operation “does not give satisfaction to the consumer, and it is very expensive, not only for the manufacturer but also for the dealers”, he said a few days ago in “Autoactu”. In his strategic plan, the Portuguese leader has set himself the ambition of reducing his distribution costs by 40% by 2030.
This requires the development of online sales (a third of the total at this time), but also a more direct relationship with the customer. Stellantis therefore offers its dealers to become agents. Volkswagen, Mercedes and BMW have embarked on identical approaches, even if certain terms and conditions (agent contract at Stellantis, “indirect” agent at Volkswagen, etc.) differ.
In this new system, “the manufacturer will bear the stocks financially, and will carry out the invoicing directly. He will pay rent for the rental of the surfaces, and will take charge of the training of the sellers, ”decrypts Marc Bruschet, who chairs the concessionary branch of Mobilians (ex-CNPA). The agent will be remunerated by its sales, according to services rendered, such as the delivery of vehicles sold online.
Master the data
“With this new organization, manufacturers hope to control the selling price,” continues Marc Bruschet. This should allow them – in theory – to reduce discounts, indirectly maintain the value of their recent second-hand goods (essential parameter with the rise of leasing) and ensure consistency with online sales prices.
“By recovering invoicing, brands also want to capture customer data to better exploit and resell it, concludes the dealer. This is not shocking, provided that it is accompanied by remuneration from the network. Otherwise, it is spoliation. »
This subject is one of the points of tension in the discussions between the brands and their networks, just like the compensation of the goodwill in the event of breach of the contract. Negotiations are still often tough, except at Mercedes, which signed a framework agreement in December 2021 to gradually switch its sales network to agent status.
A few brands have chosen to avoid the big bang. Renault will make adjustments to the current contracts, but will remain under the concession regime. Hyundai and Kia will do the same, as will Toyota. “ Our strategy is to keep the current framework, by lowering our fixed costs. This is the best guarantee of a personalized relationship and a high level of customer satisfaction,” explained Frank Marotte, France boss of the Japanese manufacturer, at the start of the year.
VIDEO. 4 things to know about Stellantis