Mercedes-Benz UK chief executive Gary Savage has said he finds the roll-out of the brand’s direct-to-consumer agency model car retail strategy “hugely exciting” – despite agents' two-tier car retail sector concerns.
Savage was quoted in a statement issued by the German premium carmaker after the first month of trading under the new model – to replace the franchised agreements previously held by its 138 franchised sites – brought a 20.9% decline in registrations to 5,030 units in January's growth market.
One AM100 car retail group director told AM the situation could have been worse if not for the OEMs’ registration of its own demonstrator fleet to replace those owned by retailers under the previous franchise agreement.
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LenCurran - 10/02/2023 13:21
OEMs need to adapt to changes in consumer purchase behaviour but the agency model underestimates the the incremental sales generated at dealership level. It removes the dealers' ability to 'deal' so the floating buyer who is not committed to buy the brand will be easy prey for a competitor who can deal. High draw brands such as MB will lose around 20% of sales under an agency model, generalist brands closer to 30%. It will only balance out if and when everyone goes to agency.