AGENCY RETAILING – ASSESSING THE POTENTIAL USED CAR IMPACT

In 2024, BMW’s agency retailing model will launch in the UK with Mini and will offer used cars up to a maximum of 18 months old .

While it may not happen immediately, it is hard not to foresee that in the threeyear period of a typical Personal Contract Purchase (PCP) or Personal Contract Hire (PCH), car manufacturers (OEMs) adopting an agency model might test retailing used cars as the primary financing period ends.

With Volkswagen Group, Stellantis, Ford, Jaguar-Land Rover and Volvo launching agency models or investigating the potential for all or some of their brands/models a significant change lies ahead and in the case of Mercedes-Benz, it is already live.

The rationale for the agency model is that OEMs and their associated finance business can take control of the information, pricing, and contracting parts of the value chain. At the same time, they can also take time/cost from the distribution process and get closer to the end buyer.

It would be wrong to see this move in isolation. OEMs have been increasing their footprint in other upstream fleet and mobility services distribution areas.

Volkswagen is part of a consortium that bought Europcar. Through Volkswagen Financial Services, it also owns a 60 per cent stake in Europe’s largest fleet management company FleetLogistics. This is in addition to its in-house fleet business. BMW own the Alphabet fleet business, which has grown organically and by acquisition in recent years. There are plenty of other examples. Outside of in-house fleet businesses, it has been common for major fleets to have a direct, central relationship with OEM brands.

The opportunities for OEMs to retain that first market change used car is clear; y To support residual values y To support aftersales work and the value of OEM parts y The secondary finance opportunity y Access to a new customer y Brand building y Overall profitability

As with new cars, there is likely to be a role for an agency retailer in any used retailing. Test drives, handovers, the part-exchange/ de-fleet process. An interesting addition to this position is the potential for OEM related online retailing platforms such as Heycar where Volkswagen AG, Daimler and Renault Group are all stakeholders.

While some might point to the wellpublicised challenges some new start online retailers have experienced and the issues of stocking, storing and refurbishing such stock, I suggest consumers will see higher brand equity in a long-established OEM from a sales perspective. The agency retailer looks like a natural solution in terms of inspections, preparation and handovers.

While some of this position is hypothetical, BMW has laid down a marker, and if OEMs can gain greater control of the de-fleet remarketing process, and for some at least the steps are emerging, then access to used stock up to three years old could become more competitive in the coming years.

That the agency retailing provides challenges is clear, but we should not ignore the opportunities such as lower stocking and operational costs and retailers inherent agility. These and other thoughts will form part of my next article on this important issue.

Top 10 Marques

by Colin Gleghorn Managing Director, Autotech Training