BMW Australia ‘no current plans’ for agency model switch

BMW Group Australia says it has “no current plans” to move away from its franchise dealer sales channels in favor of a Honda- and Mercedes-Benz-style ‘agency’ model that would give it more control over pricing and inventory.

Despite that the company is moving more towards Direct-to-consumer business models across Europe, as reported earlier this week.

The agency model takes responsibility from licensed franchise dealers (separate private or public entities) and gives car companies greater control over inventory and pricing.

Instead of selling wholesale stock to dealers, which must be stored and sold at the time of deduction, the agency model sees car brands ship customers directly from their controlled inventory, before paying the dealer / agent a fee to facilitate test drives, purchases and pickups.

“We are currently in talks with our European dealers to move towards a de facto agency model,” said Peter Nota, head of sales and marketing at BMW Group, adding that both insurance and mini are considering new business models.

China is not on the table at the moment, he added, and it is not legal in many US states where franchise laws prohibit carmakers from selling directly to customers.

At least according to a local company spokesman, Australia seems to be on the same boat right now.

“Together with our dealer partners, BMW Group always strives to deliver the best premium experience to its customers,” a BMW Australia spokesperson told us today.

“As customer expectations change, digitalisation increases and online vehicle sales expand, BMW Group sees the future of Europe as a direct sales model.

“It is currently being built together with dealer partners who will continue to be the backbone of our company’s sales success.

“[But] The focus is on Europe and there are no current plans to change the existing sales model in Australia. “

BMW Group Australia’s current position on this hot-button issue until May 2022, part of this feature since July 2020, reflects what it told us when we last asked about it.

It certainly doesn’t blow up a switch down line, and many industry experts say all carmakers are closely monitoring competitors exploring direct-to-consumer strategies.

Newly adopted car brands say it gives customers access to a more universal pool of stock instead of forcing customers to make dealer-to-dealer purchases, and it completely eliminates the huggling process, which some people see as a point of pain.

Dealer advocates and dealers themselves say it lines up the car brand’s pockets and eliminates healthy competition, which can actually lower prices when stocks are available.

Both Mercedes-Benz and Honda have adopted agency models in Australia, with both brands suing disgruntled dealers and consumer watchdogs for switch-related issues, respectively.

In the case of Mercedes-Benz, most of its dealers want compensation despite signing a new contract. It is hoped that any set of instances here will help determine the direction OEM chooses to go next.

More: BMW is exploring ‘agency’ sales models
More: Mercedes-Benz persuades European dealers to adopt agency model
More: Honda Australia agency details sales, as new model strengthens.
More: Honda is taking Australia to court ACCC
More: Questions and answers about why Mercedes-Benz is changing its dealer model
More: Mercedes-Benz vs Dealer: Agency War Federal Court Date Secured
More: NSW senator says Mercedes-Benz agency misleads Senate over switch

More: BMW Australia agency doubles dealership as competitors leave sales

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