TURIN – Stellantis has revised the timeline of its switch to a so-called agency distribution model, a move that will give brands and dealers more time to adapt to the change.
The rollout of the agency model, in which the automaker rather than the dealer holds the inventory and sells directly to the customer, will first occur in July 2023 in four small markets – Austria, Belgium, Luxembourg and the Netherlands, Stellantis said in a news release last week.
It will apply to all brands that Stellantis sells in those markets.
In a change announced last week by Stellantis, premium brands Alfa Romeo, DS Automobiles and Lancia, and commercial vans under the Citroen, Fiat Professional, Opel/Vauxhall and Peugeot brands across Europe will move to agency from January 2024, six months later than originally planned.
“Switching to agency is an epochal change, and we welcome the idea to have more time to fine-tune all the details,” a dealer involved in the negotiations with Stellantis told Automotive News Europe.
Read more: Why Stellantis’ dealer network shake-up is a game-changer
Stellantis first unveiled the plan to switch to an agency model in an interview with ANE in autumn 2021. Other automakers are also moving away from the traditional model in an effort to lower distribution costs, better control their inventories and gain closer contact to their customers.
A Stellantis spokesman told ANE that the change in timing will permit dealers and the automaker to analyze the outcome of the agency model after six months in operation in the four pilot markets.
The January 2024 start date for premium brands and vans will also coincide with the start of a new fiscal year, avoiding a situation in which some dealerships would operate under both the existing franchise contract and the new agency model.
The two models have different margins: Franchise contracts have higher margins, because dealers must pay for inventory and branding costs, while the agency model’s margins are lower, because the automaker assumes the cost of inventory and branding.
Stellantis plans to move its volume brands – Citroen, Fiat, Opel/Vauxhall and Peugeot — to the agency model in the following 24 to 36 months, or in 2026-27.
Moving to the agency model is part of Stellantis’ plan to reduce its distribution costs in Europe by 50 percent by 2030, as part of the Dare Forward 2030 strategy unveiled in March.
Under Stellantis’s agency model, it would cover all distribution costs, including inventory and incentives. These expenses are estimated to account for about 30 percent of a vehicle’s list price.
It would also reduce the margin given to dealers per car, which is now 9 percent of the vehicle’s price, with dealers now free to use part of that margin for discounts. The money they earn is also boosted by volume bonuses, another cost that the agency model would end.
The new model could see dealers’ margin for selling a car fall to 4 to 5 percent, Stellantis’ head of sales and marketing for Europe, Maria Grazia Davino, told ANE in November 2021.
Even small changes to the level of discounting on the vehicle and the financial support provided by the automaker to the dealer “are worth hundreds of millions of euros,” Steve Young, managing director of UK-based automotive retail research specialist ICDP, said.
Uwe Hochgeschurtz, Stellantis’ chief operating officer for Europe, said in the news release last week that the group aimed to promote a “sustainable” distribution model and all stakeholders would benefit.
Stellantis said it ran a comparative economic simulation showing that, under the agency model, dealers would enjoy “at least equivalent profitability” and reduced exposure to risks.
Luxury and premium brands are among the early movers to an agency model in Europe. (Franchise laws in the U.S. generally do not allow for such a sales model.)
In December 2021, Mercedes-Benz announced that it had reached agreement with its European dealers to transition to an agency model, which it refers to as direct sales.
It is expected to be rolled out in Germany and the U.K. next year.
Britta Seeger, the Mercedes Benz management board member responsible for sales, said at the time that by the end of 2023, more than half of new Mercedes vehicles available in Europe “should be sold under the agency model.”
Mercedes conducted direct sales pilot projects in Austria, Sweden and South Africa.
Smart, a joint venture between Mercedes and Geely Group of China, is using an agency model for sales in Europe of the new range, starting with the #1 small crossover. Existing Smart models such as the ForTwo as still sold in Europe under the existing franchise dealer contract with Mercedes.
BMW and Mini may switch to the agency model in Europe, BMW Group’s sales and marketing boss Pieter Nota told ANE in May.
Autohaus magazine had reported in March that BMW planned to end its authorized dealer system in Europe from 2024 for Mini and from 2026 for the core BMW brand and instead rely on agency sales for new cars.
Nota said that the timing is still under discussion and that the agency model could be applied to the BMW and Mini brands, but not to the company’s Rolls-Royce ultraluxury brand, which will stay with the current franchised dealer model.
Audi uses an agency model for its e-tron electric cars only.