Why I'm mourning the death of the agency sales model

"Agency is dead, finished," so said one dealer group executive privately early this year. His tone suggested that car makers must have been mad to ever think they could take over the business of selling cars directly to customers, with dealers acting as handover ‘agents’. In one way, he was right. Car makers have proved in the years since the Covid pandemic that they lack the ability to shift metal when markets turn tough. For that, you need a properly incentivised salesperson. Many including Stellantis, Mercedes-Benz, JLR, Ford and Volkswagen have dialled back or abandoned plans to shake up their distribution by switching to the agency model. But that doesn’t mean the whole idea to move from the current model of wholesaling cars to dealers was wrong. One benefit of selling direct to customers was to make the process of buying a new car a lot less painful. How painful it can be is something I’m experiencing right now as my wife and I try to replace our family car. If a car is sold directly, the relationship is between the car maker and the car buyer; there’s no one in the middle. This is what Tesla established and what the 'legacy' car makers then tried to copy. In our mission to get hold of a new Renault Scenic, however, there are two separate organisations between us and Renault: Octopus EV (the leasing company) and Brayleys (the supplying dealer). This might all work fine if the process had gone smoothly, but it hasn’t gone smoothly (it’s a tumultuous world), and that has exposed the underlying problem of non-direct sales: who to blame and who to chase. Without lingering for too long on our specific situation, the Scenic was ordered in April, then delayed from June to July to August to September or October to – current status – the beginning of November. Every update has come via a phone call made by us to Octopus or Brayleys. Neither seem to know much, probably because they’re one of a chain. Renault also doesn’t, because ours is a fleet order and it doesn't have visibility until the car has been assigned a VIN and it begins its journey down the production line. It might be that Renault is having trouble building the Scenic, but that’s less of a problem than the lack of information. With our current lease running out early September, we don’t know whether to cancel, reorder with someone else or hang on. One of the benefits of selling direct is that the entity actually responsible for building the car has a personal relationship with the customer. Renault never embraced the idea of agency sales, but in the dream world envisaged by every automotive consultancy pitching agency in 2021/22, we would be leasing our car from Renault and getting updates via an app before tracking it down the production line and onto the boat or lorry. Renault knows the benefit of tracking every single car down the production line to delivery and says it does offer customers the ability to follow progress – but only once the VIN has been assigned. How far down the order queue we are is seemingly unknowable for Octopus, Brayleys or Renault. We already have some idea of how well a direct sales model can work with our current car, a Toyota Corolla leased directly from Toyota’s own mobility/leasing arm, Kinto. There was still a supplying dealer to muddy the process and the car was also delayed amid the chip crisis, but Kinto was on top of the situation and we received fairly regular updates. All the customer benefits of direct sales are still as relevant as they were two years ago, before the selling realities became fully visible. The car maker really wants to establish a relationship with the customer that previously had all been with the dealer or the leasing companies. In the ideal world, communication between the customer and the car maker would all be via an app, with the car maker doling out responsibilities to their dealers. They also really want to claw back some the business lost to the leasing companies and other entities in the battle to keep customers in the teeth of formidable competition from the Chinese. If customers move their app to the prime real estate of the opening screen and engage regularly, then car makers are able to not just post updates on new car deliveries but also offer upgrades (some of which might be worth paying for) and generally become a useful addition to one’s digital life. In some respects, that is already happening – but with one crucial omission. The car buying process is still mainly in the hands of dealers and other third parties, many of whom have no interest in the customer once the sale has gone through. Until it’s service time, of course.

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Why I'm mourning the death of the agency sales model

Too many third parties can make buying a car a painful process, as our business correspondent is learning

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Why I'm mourning the death of the agency sales model

Too many third parties can make buying a car a painful process, as our business correspondent is learning

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