A EUROPEAN research report by ECG Business Intelligence said that COVID and the sales methods used to maintain sales have accelerated plans to rapidly introduce the agency sales model in Europe.

“This is a direct sales model and simplifies the process making it, in essence, a two-tiered system,” it said.

It quoted a Volkswagen statement as saying: “The agency model lays the contractual foundation for integrating online business and showroom-based business. From sales launch, customers can order vehicles from the ID family direct from Volkswagen. At the same time, they select their preferred dealer for personalised customer care and local services.”

The agency model, soon to be used in Australia with Honda and Mercedes-Benz, allows the OEM to set a price thereby eliminating any haggling with a dealer. The OEM owns the dealer stock.

In return the dealer gains an agent fee and becomes the point of contact for the new-car buyer for aftersales services, now referred to as the long-term care plan.

ECG said that European Dealer Council (which represents dealer councils including Volkswagen) president Dr Matti Porho said: “We believe in the new business model as it will strengthen dealers’ entrepreneurial responsibility.

“In the areas of digitalisation and e-mobility, the major tasks for the future, dealers will play a key role. To shoulder these challenges, dealers need a firm foundation of profitability.”

ECG said that this year Kia Motors, already an early adopter of the agency sales method in the Balkan region, started a pilot in the Netherlands.

“Mercedes has been trialling the agency sales model in Sweden since April 2019 and is to roll it out in Austria this year,” it said.

“Mercedes-Benz aims to significantly ramp up its online sales platforms as it aims to sell 25 per cent of global volumes online by 2025.

“Volvo Cars has also announced ambitious plans to sell 50 per cent of all its vehicles online by 2025 and 100 per cent by 2030.”

By Neil Dowling