Eddy Haesendonck, former CEO of BMW Belux and for several months the new CEO of Hedin Automotive Benelux, has his doubts about the agency model that more and more car manufacturers are considering or have already opted for. On paper it seems attractive … but in practice, according to Haesendonck, people forget the great added value of a dealer. Some excerpts from a larger interview that you can read in the September magazine FLEET.
No longer having to keep stock, a fixed commission per car sold, the agency model seems to provide more rationality in car distribution. What’s against that?
eh: “The agency model has a logic for the manufacturer in terms of efficiency and cost. The bargaining with price discounts would therefore disappear. A fixed commission for the agent and a fair price for all customers. I think that in itself is a good thing. The only question is whether the agency model can still offer the same customer experience and is also prepared to make the necessary investments. Finally, the agent becomes a kind of conduit that takes the initiative away from him.”
What do you mean by initiative?
eh: “A disadvantage of the agency model is that it is not attuned to the complexity of car distribution. In 80% of the cases, the customer also sells his second-hand car when he buys a new car. A classic concessionaire has a tradition in this. If a new car is delivered later than planned – very topical today – he looks for an individual solution for his customer. For example, he can provide a replacement car or re-evaluate the acquisition price of the second-hand because the customer drives it longer. This is much less evident in an agency model. Because there the customer is actually in direct contact with the constructor, albeit via a customer service center. This raises the question: who is going to arbitrate that? So you take a piece of individual one on one communication between customer and dealer is lost and that causes problems anyway.”
Ultimately, many manufacturers will question whether the intended savings of an agency model can be achieved
Does that also apply to the B2B market?
eh: “Actually even more. Especially for companies that lease their vehicles. In that scenario, you actually have three customers: the employee’s shortlisting company, the driver, and the leasing company. Traditional dealers have a lot of experience with this. In an agency model, that whole dynamic moves to the manufacturer. We see today that the challenge of managing that is huge… and that’s why many manufacturers have come back from the agency model.”
Isn’t the juice worth the cabbage in the end?
eh: ”I say above all that one should think carefully before throwing the dealer’s wealth of experience and know-how overboard. Consider, for example, the digital connection (or lack thereof) of the services that are sold together with the car. Matters such as financing formulas, insurance and charging solutions. All services with which the dealer is a “single point of contact” for its customers. This is something the classic dealer are craft has made of it and has it completely under control. In an agency model, this is again much less evident. With the late deliveries you are actually in a pull market today. As soon as they get back into a push sales model when sales would drop, I’d like to see how efficient that agency model is. Ultimately, many manufacturers will question whether the intended savings of an agency model can be achieved.”
