EAGERS Automotive has bought into the agency retail model discussion by stating that it is undeterred by the move by Honda and said the traditional vehicle transaction process will remain because consumers will still have a need to trade their old cars.

Eagers’ CEO Martin Ward said in a shareholder address that “the reality is that a significantly large chunk of people that are going to be purchasing a vehicle, whether it’s new or used, already have some form of vehicle”.

“So there is going to be a transaction where a car needs to be disposed of before a different car is purchased, either new or used.”

He said the only publicly announced change to an agency model is Honda.

“There is talk in the market about Mercedes, but they have not publicly agreed, and I don’t believe it is agreed yet,” he said.

“So there’s only the one announcement from Honda.”

Mr Ward said changing the franchise business model only involved “a very small proportion of operators”.

“The top two brands in the country with 30 per cent plus market share are not looking at this business model,” he said.

“Further reality is the used-car sector will need a business like ours or others that are able to work out the economics of running it.

“We sell more than 100,000 new cars and we talk to three or four customers for every car that we actually sell. That is 400,000 potential people that we can acquire their car from.

“Whether it’s an agency model or a traditional model, that transaction needs to be dealt with.”

Mr Ward said most people quite often don’t actually realise what to do with their used car when they go shopping for a new car.

“That is one of the massive challenges of agency models because they are talking simply about making one price for a new car,” he said.

“They’re not talking about the need to deal with the old car and finance at the same time. And that’s where it’s significantly challenged.”

He said Eagers’ aim was to grow the used-car business.

“Our first target is to get to one-to-one (used to new),” he said.

“We aim to get to the same number of new cars that we’re selling as the same number of used cars that we’re selling, whether we’re selling it through the franchise automotive structure, or whether we’re selling it through a used-car outlet (like easyauto123).”

By Neil Dowling