In a world where disruptive business models are ever more common, the agency retail model could forever change the way we buy cars. In the latest Autocar Business Live webinar, we spoke to Jonathan Goodman, CEO of Polestar UK; Duncan McPhee, COO of dealer group Lookers; and Tony Whitehorn, consultant and ex-CEO of Hyundai UK; about how it could transform retail in the UK.
The full interview is also available in video- on-demand form.
What is an agency model?
JG “We don’t really call it an agency model. What we have is a new brand starting out with a direct consumer model. And when we set out how we wanted that to happen, it meant that we needed retail partners who were focused on delivering exceptional information to the customer, listening to their inquiries and helping to educate them.
“Our retail partners can focus entirely on the customer while the consumer will transact online direct with us, which gives great perspective on their requirements. Everything else allows the retailer to focus on dealing with the customer in situ.
“And we took out things like wholesaleing cars. So the dealer doesn’t find themselves wholesale with a number of cars they don’t want; they focus on listening to what the customer wants. And for that we pay them a healthy commission, which enables them to have a very profitable business model as well.”
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What’s the benefit to manufacturers?
TW “This agency model is being driven by the manufacturers. Why? First, for an economic reason. BEVs are about four times more expensive than a petrol vehicle, therefore the margins are being squeezed by all the manufacturers. They’ve gone to the retailers [with] about 15% [margin] that they could actually take and reduce and therefore help the margin.
“Secondly, they realise that other competitors are going down this route. Because of it, rivals like Polestar can now talk directly [to customers] and do online transactions. With the franchise model, you can’t do that.
“Thirdly is the direct-selling route. So they can then talk directly and sell directly on an ongoing basis to the customer and almost monetise the asset - the vehicle – over a long period of time. For instance, you might have a dog, so the manufacturer can sell a dog guard directly to [you].”
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No mention of Tesla's role in making this happen then? Mercedes and others had been trying to get the agency model off the ground for years with no real success until Tesla gave everyone a fright. Now it's all common sense.