The traders cars have a lot of worries. They both have to deal with the sales of new cars that are likely to dream for the third consecutive year at a historically low level, but also to face the desire of some producers to modify their distribution contracts, in a direction that would not be good for them.
Many manufacturers intend to take advantage of the changes in regulations at the European level, the guidelines of which should be finalized in the coming weeks. On this occasion, they want to move the distributor from the status of a dealer to that of an agent. This will undoubtedly have an impact on key stakeholders, but also on customers.
Who sets the discount rate?
In 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 seller sets the selling price, and therefore may choose to add a discount on the model that does not sell. In fact, prices are highly dependent on “commercial channels”, these discounts on the price list approved by the brand and then paid to the seller.
This style is considered inappropriate by Stellantis’ boss, Carlos Tavares. This last one suddenly he put his foot on the plate by terminating in May 2021, with two years’ notice, the contracts of all the group’s suppliers in Europe for its 14 brands (Peugeot, Fiat, Citroën, Jeep, etc.).
Establish a more direct relationship
The current operation “does not give satisfaction to consumers, and is very expensive, not only for the manufacturer but also for dealers”, he said a few days ago in “Autoactu”. In his strategic planThe Portuguese leader has set himself the goal of reducing his distribution costs by 40% by 2030.
This requires the development of online sales (one third of the total at the moment), but also a direct relationship with the customer. Therefore Stellantis offers its traders to be agents. Volkswagen, Mercedes and BMW have started similar approaches, even if certain terms and conditions (agency agreement in Stellantis, “indirect” agency in Volkswagen, etc.) differ.
In this new system, “the manufacturer will carry the stock financially, and will execute the invoice directly. He will pay the rent for the rental of the faces, and he will supervise the training of the sellers, “explains Marc Bruschet, who is the chairman of the concessionary branch of Mobilians (ex-CNPA). The agent will be paid by his sales, according to the services provided, such as delivery of cars sold online.
“With this new organization, producers hope to control the selling price,” continues Marc Bruschet. This should allow them – in theory – to reduce discounts, indirectly maintaining the value of their latest second-hand products (an important criterion and rent rise) and ensure consistency with online sales prices.
“By returning invoices, brands also want to capture customer data in order to make better use of it and resell it, concludes the seller. This is not surprising, as long as it is accompanied by payment from the Internet. Otherwise, it is a waste. »
This subject is one of the points of tension in the negotiations between brands and their networks, such as compensation for good faith in the event of breach of contract. Negotiations are still often difficult, except for Mercedes, which signed a framework agreement in December 2021 to gradually transition its sales network to agency status.
A few brands have chosen to avoid the big bang. Renault will make amendments to the current contracts, but will remain under the agreement regime. Hyundai and Kia will do the same, as will Toyota. “ Our strategy is to keep the current system, by reducing our fixed costs. This is the best guarantee of a personal relationship and a high level of customer satisfaction,” explained Frank Marotte, the French boss of the Japanese manufacturer, at the beginning of the year.
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