Dealer disruption

CUSTOMER-ORIENTED ‘AGENCY MODELS’ FROM OEMs SEE DEALERS’ ROLES CHANGING, BUT IS IT BETTER FOR CONSUMERS? OR A CASE OF CARMAKERS CUTTING INTO DEALER PROFITS?

- DAMION SMY

THERE’S BEEN raging debate around automotive showrooms across Australia on several fronts, sparked by GM’s ill-handling of Holden dealers. Yet there’s no denying that the rise of the internet and global juggernauts like Amazon and Uber Eats has impacted the way Australians buy almost everything.

But what about the process of buying a new car? Here in Australia, the traditional dealership model has hardly changed – at least until the last 24 months or so, with carmakers and dealership groups at loggerheads once again.

Mercedes-Benz Australia is the second brand in as many years to announce a shift away from the dealer model. From January 1, 2022, its Australian dealer network will operate via an agency model for new-vehicle sales. Here we’ll walk you through what it all means, who really wins, and how it may change the way you buy your next car.

1. WHAT IS AN AGENCY MODEL?

Agency models, while varying between brands and markets, typically include the carmaker owning vehicle stock instead of selling them to a dealership, who would traditionally then on-sell them.

The second major component is a standardised national price on each vehicle, bringing an end to ‘haggling’ and negotiation on a new vehicle price. There’s still potential negotiation on trade-ins, and in the case of Honda and Mercedes, it doesn’t change anything for customers when it comes to parts or servicing, all of which are still handled by the dealer.

Automotive brands in Australia that employ agency models include Tesla, Honda and, soon, Mercedes-Benz.

2. WHAT’S IN IT FOR THE CONSUMER?