Stellantis UK will cut sales partners that fail to deliver satisfactory customer service, amid a wider shake-up of its retail operations aimed at simplifying the business.
A spokesperson told Autocar Business the firm was currently reviewing UK dealers based not on sales volumes but feedback. As the review is “currently in play”, they couldn't confirm the number of partners to be axed.
It will also depend on how dealers respond to the review and updated targets on customer feedback, implying that some might be able to recover from the chopping block.
Despite the cuts, the spokesperson stated that the number of sales points wouldn't be reduced and that agency sales directly to customers wouldn't replace franchises.
Agency sales are to play a key role in the Alfa Romeo and DS retail revamp under Stellantis UK's new Premium Brands division.
The two marques will transition to the sales method – already used by the likes of Genesis, Polestar and Tesla – from mid-2023.
Under the agency model, cars are purchased directly from the manufacturers rather than through a franchise dealership (for example Lookers or Robins and Day).
The Stellantis spokesperson confirmed this move is motivated by customer feedback around transparency. Car buyers don't want to haggle for discounts and would prefer to know the price they will pay as soon as they walk into a showroom, the spokesperson said.
This can also boost profit in the long-term, too, because fixed pricing can boost residual values.
The Polestar 2 Standard Range, for example, is expected to retain almost 67% of its value after three years, according to data from Cap HPI. Meanwhile, the similarly priced Nissan Ariya – not sold under the agency model – is expected to be worth just 58% of its original price after three years.
Tony Whitehorn, consultant and ex-CEO of Hyundai UK, told Autocar Business in March that the agency model was in part financially motivated; manufacturers have “gone to the retailers [with] about 15% [margin] that they could actually take and reduce, and therefore help the margin”.
Stellantis UK’s investment in the agency model mirrors that of the premium brands with which it plans for Alfa Romeo and DS to compete.
Mercedes-Benz announced in May that it plans to axe around 10% of its dealerships globally in favour of agency showrooms. The firm aims for 80% of European sales to come through this method by 2025.
Volvo UK announced in March 2021 that it will sell 100% of its vehicles online, directly to customers, by 2030.
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