NISSAN Oceania vice president and managing director Andrew Humberstone has no plans to follow Honda and Mercedes-Benz by introducing an agency sales model but does see a future for more sales to take place online.

His comments come at a time of introspection over the agency model in Europe and the UK where it is having mixed results (See below).

As far as Nissan internet sales are concerned, the brand has dabbled with online sales when launching the Z sports coupe and the method saw decent uptake in the UK during Mr Humberstone’s tenure. He said that the UK market was “10 years ahead” of Australia in terms of the acceptance among Nissan customers to make internet-based vehicle transactions.Mr Humberstone said the agency model “can work for certain brands” but said for Nissan, “I don’t think it’s the panacea for us”.

“It’s not the model that we would adopt.”

Expressing no desire for Nissan to become a dealer or operate its own showrooms, Mr Humberstone said the company “would respond to market dynamics and consumer needs and demands (but) we would only have those conversations with our dealer network”. 

Mr Humberstone said that he could “see a trajectory where people will buy more and more online”, and that this was already occurring in the UK. He said that the UK is 10 years ahead in terms of “what the customer wants and is ready to accept and adapt to.”

“Here, the business models will change, for sure, but we are not actively pursuing an agency model.”

Andrew Humberstone

Meanwhile, Cox Automotive’s insight and strategy director, UK-based Philip Nothard, said in a recent post that “It’s time to move past the agency model false dawn”.

He said that effective agency model implementation requires a focus on new vehicle supply, centralised dynamic pricing and local retailer deal-making.

He said that recent developments in agency sales include:

• Real-world agency model experiences failing to live up to expectations, with some OEMs pulling back while others forge ahead
• Challenges as some OEMs continue to push excess supply into the market without the new pricing mechanisms to manage demand
• New agency models need to be developed, which focus on paying attention to supply/demand dynamics and introduce centralised dynamic pricing
• Implementing the agency model in the UK automotive market demands a carefully planned and strategic approach to ensure success. 

Steve Young, the managing director of the International Car Distribution Program (ICDP) writing in the latest Insight Quarterly report from Cox Automotive said there are several critical challenges associated with the agency model’s current implementation, including:

• Incomplete and missing processes
• IT that doesn’t work as intended
• Ambiguity regarding the true definition of an agency model. 

“There is no such thing as a non-genuine agency,” Mr Young said. He explained the primary processes that most represent obstacles to successful adoption of the agency model are vehicle supply and pricing.

“Pricing is the key lever for balancing supply and demand,” he said. “In the traditional franchise model, manufacturers wholesale vehicles to dealers at fixed prices. Dealers then use some of their margins and OEM support to secure sales. While this approach has its inefficiencies, it also brings certain advantages,” Mr Young added.

“In theory, a centralised dynamic pricing tool should replace dealer price negotiations, but in the near term, some flexibility is needed based on a  hybrid model where OEMs can make the coarse adjustments to reflect market conditions, and dealers can still apply a final discount where needed to close a deal.”

“Several brands, including Stellantis, Volkswagen Group, BMW, Genesis, Honda, and Mercedes-Benz, have announced plans to transition to an agency model. 

“Conversely, brands such as BYD, Hyundai, Kia, Mazda, MG, Nissan and Renault remain committed to the traditional franchise retail model. Brands like JLR, Lotus, and Ford have experimented with the agency model but have since reverted.”

Philip Nothard

Mr Nothard said in the post: “Under the agency model, the OEM acts as a direct seller, setting prices and removing commercial risk for the retailer. Given the importance of residual values in the strength of the used vehicle market, maintaining flexibility in the system is crucial. 

“The market is evolving rapidly. By 2030, the vehicle mix will be vastly different from today. With consumer spending under pressure and demand for a seamless buyer journey on the rise, the agency model must evolve to meet these needs. 

“Flexibility is key, allowing OEMs and dealers to adapt and retain alternative models if better suited. This will lead to greater efficiency and improved experiences for all stakeholders,” Mr Nothard concluded.