The agency sales model transforms a carmaker into a shop that sells automobiles at a set price. The typical dealership acts as the buyer’s physical touchpoint in direct sales. Instead of a variable commission, the dealer gets a flat charge for each car sold. When the i3 and i8 came in Europe in the early part of the 2010s, BMW was one of the first to use this technique.
The agency model, however, was discontinued a few years later, only to be reinstated in South Africa for the full roster a couple of years ago. BMW is now seriously contemplating direct sales across Europe, but not in China. Furthermore, franchise regulations render this sales method illegal in many US jurisdictions where an automaker cannot offer a product directly to the customer.
In an interview with the media at the Concorso d’Eleganza Villa d’Este, BMW Group’s sales and marketing chief Pieter Nota revealed the prospect of transitioning to an agency distribution model for the main brand as well as MINI, while Rolls-Royce would continue to use a franchised dealer network. In an interview on the beaches of Lake Como in Italy, Nota said that all models offered on the Old Continent will be sold via direct sales.
It’s too early to determine when BMW and MINI would switch to the agency model, but it’s doubtful in the near future. According to the German journal Autohaus, BMW will phase out its approved dealer system in Europe beginning in 2024, with MINI following suit a few years later. Archrival Mercedes already employs this method in five markets and plans to expand to 20 by the middle of the decade. Audi will convert to agency sales beginning in 2023, but only for its fully electric E-Tron cars.
Why are three German luxury brands moving toward direct sales? Basically, to reduce distribution expenses and have more control over the selling process.
Automotive News Europe is the source.
