Seven out of 10 dealers (71%) believe an industry wide shift to the agency sales model is “effectively over”, according to new research.
April’s Startline Used Car Tracker, based on the views of 58 dealers, shows that 33% believe agency hasn’t worked for most dealers, 31% that most manufacturers are abandoning their plans and 10% that the model is bad for customers.
Paul Burgess, Startline Motor Finance chief executive, said: “Just a few years ago, there was a widespread move among manufacturers to shift away from franchises towards the agency model and some pushed ahead but the momentum has faltered.
“The reasons for the initial enthusiasm were because manufacturers felt agency would give them greater control and access to more of the margin on car sales and other profit opportunities, but the reality has often failed to live up to the hype.
“A few manufacturers have backtracked and others have quietly abandoned their plans.”
Burgess said some dealers who work under agency have been moderately happy to do so but generally speaking, the motor retail sector “has been doubtful about the idea from the start and now appears to believe the strategy is unlikely to deliver the revolution that was once promised”.
However, the Tracker research also shows that 15% of dealers believe that general economic pressures mean manufacturers will return to the agency model at some point, 15% that it has worked for some dealers and 13% that it has worked for some manufacturers.
Burgess added: “There remains something to be said for this minority point of view.
“It seems almost certain that manufacturers are going to come under increasing pressure to maintain profitability – ranging from the huge ongoing investment required for electrification through to an increasingly competitive new car market that is seeing many new entrants.
“It could be that at some point in the future, agency will once again appear to be an area where generating additional revenues is possible. It could yet reemerge.”