PWA CEO Mark Weaver told GoAutoNews Premium that no matter what model OEMs develop they will have to be profitable if they are to continue to operate a sales network.

He said the alternative was for the OEM to be without a distribution network and have to find the money to fund a network themselves. 

Mr Weaver was asked by GoAutoNews Premium about the dramatic changes in the industry in the past three years – monthly sales falls, new regulations, increased online business with customers and the subsequent reduced importance on a bricks-and-mortar presence – the evolving EV products and ramifications on sales and service, and the agency model under adoption by two OEMs.

Mark Weaver

He said: “There’s more of these issues that have emerged in the past three years than we’ve seen in the past three decades and there is some uncertainty around where some of these issues sit,” he said.

Referring to the agency model, he said: “From the work that we’ve done in our involvement in both of the brands that have announced their agency model move, one (Honda) is very advanced and developed.

“We’re working with them and we’re comfortable with how that journey is going. While it’s a radical change, we still see ourselves playing a key role as part of that process. It’s just a different model.

“Mercedes-Benz still has a bit of a journey to go, I think, to define what their model looks like. So we’re working with them to try and give them feedback.

“Paul Warren (the listed company’s new executive director) at one of our investor meetings said that fundamentally, (no matter) whether you’re retail either under a franchise agreement or agency agreement, it has to be profitable.

“If for some reason that doesn’t occur in these agency models, the agency model and the OEM will need to flex them because without a distribution network, they’ll be expected to suddenly find the bricks and mortar environment to do this all around the country. 

“And I don’t think I think the OEMs are prepared to do that in the current market. 

“So there is still some comfort there that the agency model has got to be profitable for them and profitable for the retail network. Hence we do not have a concern because we’re going to work with our OEM partners and find a way to make this work.”

Mr Weaver said any effect EVs will have on the retail business are a “long, long, long way” down the track before the workshops become full with electric vehicles. 

“It will still be critical for a need for bricks and mortar at a service point, the need for bricks and mortar as a test drive location, the needs for bricks and mortar in the sales and delivery point,” he said.

By Neil Dowling