{"id":19714,"date":"2023-10-13T06:01:45","date_gmt":"2023-10-13T05:01:45","guid":{"rendered":"https:\/\/www.autocar.co.uk\/car-news\/business-dealers\/return-new-car-discounts-first-big-test-agency-sales"},"modified":"2023-10-13T06:01:45","modified_gmt":"2023-10-13T05:01:45","slug":"return-of-new-car-discounts-is-first-big-test-for-agency-sales","status":"publish","type":"post","link":"https:\/\/gamefootballmobileanimeiphone.com\/index.php\/2023\/10\/13\/return-of-new-car-discounts-is-first-big-test-for-agency-sales\/","title":{"rendered":"Return of new car discounts is first big test for agency sales"},"content":{"rendered":"

\"96<\/a><\/p>\n

\n Polestar, along with sibling brand Volvo, are among those that adopted the direct-to-customer agency model last year<\/p><\/blockquote>\n

Manufacturers that sell directly to customers are pushing to boost sales after difficult 2023, What Car? data shows<\/p>\n

\n

The increasingly popular agency sales model<\/a> \u2013 whereby the car maker sells directly to the customer with the dealer acting as their agent \u2013 is facing its first big test as new-car supply returns and demand dips.<\/p>\n

Manufacturers that sell directly to customers \u2013\u00a0including Mercedes-Benz<\/a>, Cupra<\/a>, Tesla<\/a>, Polestar<\/a> and\u00a0Volvo<\/a>\u00a0\u2013\u00a0are now offering some of the biggest visible incentives to buyers as they try to boost sales, data from What Car? shows.<\/p>\n

Car makers are moving away from the wholesales model \u2013 whereby they sell cars to dealers who then sell them to customers \u2013 for the purpose of keeping a tighter control on costs, establishing direct contact with customers and keeping more of the money generated from selling the car.\u00a0<\/p>\n

That worked well when cars were difficult to get hold of during the recent post-Covid supply-chain shortages, but as the market becomes more competitive, the car makers have to replicate the same tricks used by the dealers to stimulate demand but without going back to the old system.<\/p>\n

In the traditional wholesale model, dealers are free to set the levels of discount. The size of that might depend solely on the customer\u2019s willingness to push the salesperson.\u00a0<\/p>\n

Car makers have long wanted to eradicate this haggling aspect as well as clamping down on discounting that affects residual values. But any action they do make must be repeated across every dealer and shown for all to see on their website.\u00a0<\/p>\n

Many are turning to cheap finance deals instead, offering for example zero-interest loans at a time when borrowing is expensive.<\/p>\n

\u201cUnder agency, the car makers want to protect their – now very visible – list price and deter consumers from believing that it\u2019s flexible like in the past,\u201d said Richard Peberby, UK head of automotive and mobility at consultantcy\u00a0KPMG. \u201cTherefore they will use finance, warranty and service packages etc as levers to pull instead.\u201d<\/p>\n

What deals are car makers now offering?<\/h2>\n

What Car? research shows that the top three on PCP-finance interest rates are Cupra at 0%, Tesla at 2.1% and Mercedes at 5.1%, all of which sell directly.<\/p>\n

The deals get better on electric cars. Mercedes is currently offering 0% finance on all its electric cars\u00a0from now until January, for example.\u00a0<\/p>\n

Car makers are increasingly using EVs to test the water for introducing the agency model as they try to\u00a0boost profitability on what\u2019s still an expensive drivetrain compared with combustion-engine equivalents.\u00a0<\/p>\n

For example, Cupra started agency sales with the Born and\u00a0Toyota<\/a> is selling its EVs and plug-in hybrids directly, as is Ford with its Mustang Mach-E.\u00a0Honda is switching to agency in the UK starting with its new e:NY1 electric SUV. Skoda meanwhile will move to direct sales for its electric models towards the end of the year.<\/p>\n

However, those selling directly are using discounts as lure to boost sales as well as financing packages. Volvo\u2019s October deals across all its models for example include discounts ranging from \u00a33050 on its XC40 to \u00a311,500 on its XC90. Volvo was always one of the bigger discount brands, but it’s nothing like as visible under wholesale. Mercedes, meanwhile, is currently offering \u00a38,600 off its EQC electric SUV.\u00a0<\/p>\n

Increased visibility of discounts affects residual values of used cars, something that then drives up the cost of new-car finance, creating a vicious circle.<\/p>\n

Only Tesla so far among the direct sellers has shown that it\u2019s willing to actually cut the list prices of its cars. The company\u2019s official reason is to pass on manufacturing efficiencies to customers, but in doing so, it has also created a very public benchmark for EV prices,\u00a0and not just in the segments in which\u00a0the Model 3 and Model Y compete, forcing rivals to react.<\/p>\n

Of those that sell directly, Ford<\/a> with its Mach-E has come closest to Tesla\u2019s list-price elasticity, both with increases last year to soak up rising raw material costs and again at the start of October. The firm has\u00a0offered a huge \u00a37000 cut across the Mach-E range in what it called a “promotion price”\u00a0to bring the entry version of the electric SUV to \u00a343,830, on par with the Model Y.<\/p>\n

\"\"<\/p>\n

Why did many car makers make the agency model switch?<\/h2>\n

Direct sales has always been seen as a gateway to online sales via the manufacturer\u2019s website, with the customer\u2019s nearest dealer performing the handover and claiming the agent\u2019s fee. That\u2019s still the goal, but direct-sold cars are still popping up on broker websites, which have been heavily used by dealers as an alternative sales lead, particularly when tied to monthly leasing. In theory,\u00a0this shouldn\u2019t happen, but the old methods are still proving useful.<\/p>\n

\u201cThe broker channel can still work, as the deals are usually pitched in terms of a monthly payment, so there is again no immediately obvious discount,\u201d said Steve Young, head of automotive retail consultancy ICDP.<\/p>\n

\u201cThere are plenty of deals available through brokers now on EV models, regardless of agency or franchise, which just reflects the weak retail demand versus the need to hit a Cafe [corporate average fuel economy] target.\u201d<\/p>\n

Car makers say the benefits of direct sales still outweigh the negatives, especially now they can track customers right from the start of the process.<\/p>\n

\u201cWe can be much more scientific in spending our marketing dollars and change the way we message certain offerings, because we immediately see in numbers all the way through the funnel,\u201d explained\u00a0Martin Sander, head of Ford\u2019s passenger car division in Europe.<\/p>\n

Ford fully moved to agency in the Netherlands at the start of the year ahead of other markets.<\/p>\n

Sales appear buoyant for those who made the direct-sales jump across all models. Mercedes sales for example were up 44% in September to 14,486 compared with the same month last year,\u00a0according to SMMT figures, above BMW, while Volvo sales jumped 77% to 6617. Tesla was down 35% to 6427, but the American firm isn\u2019t a great bellwether, due to its lumpy delivery schedule.<\/p>\n

The use of brokers, as well as finance offers, discounts, pre-registered cars and price cuts among those manufacturers switching over to the agency model shows that its application when the competitive landscape gets tougher is more of a hybrid between old and new as they get to grips with the change.<\/p>\n

\u201cThere will be some limits to tolerating loss of market share or financial impact on dealer groups, but I would expect a period of \u2018muddling through\u2019 before we get to a new normal,\u201d said Young. \u201cIt’s a fundamental change to car retailing, and it will take time to settle down \u2013 years, not months.\u201d<\/p>\n<\/div>\n\n

Commercials Cooperation Advertisements:<\/b><\/h2>\r\n


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Polestar, along with sibling brand Volvo, are among those that adopted the direct-to-customer agency model last year<\/p>\n

Manufacturers that sell directly to customers are pushing to boost sales after difficult 2023, What Car? data shows<\/p>\n

The 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