Signs of tide turning against agency model

New data suggests that attitudes are cooling towards the manufacturer agency model, which essentially means the manufacturer sets a vehicle’s retail sale price.

According to research carried out by Startline Motor Finance, 72% of dealers believe the industry is moving away from this model, with 36% believing that manufacturers who have adopted it will return to franchised dealerships.

The research also found that 23% believe the agency model doesn’t work for dealerships and 21% believe it is wrong for manufacturers.

Paul Burgess, CEO at Startline Motor Finance, said: “The adoption of the agency model has always been controversial to a degree, and the recent decision of some manufacturers to reverse or delay their plans has caused a lot of noise. Our findings show that dealers believe that the tide may be turning, at least to an extent. Certainly, it appears to be a fairly commonly held view that agency isn’t working for dealers and manufacturers, and that some will change their mind about its adoption.”

He said that a significant proportion of dealers believe the sector is moving towards a hybrid model, which combines both agency and franchise arrangements.

Burgess concluded: “This seems to us to be the most likely outcome for the future. There is almost certainly room for both agency and franchise models in the car market, and each appear to have their own benefits and drawbacks. It is up to manufacturers and dealers which of these sets of compromises they might prefer.”