UK market ‘not yet ready’ for true agency

By automotive-mag.com 4 Min Read

Some of the agency models introduced in the UK “stuttered” and “and fell over” because they were not true agency.

That’s the view of Jason Cranswick, managing director of Norton Motors and COO Marubeni Auto Investment speaking at the Motor Ombudsman Radium Law Automotive Business & Law Conference in London this week.

Cranswick said in some cases the upside was taken by the OEM and the downsides pushed back to dealers.

“If I look at agency through an investor’s lens, my shareholders, the prospect of releasing a hell of a lot of capital off the balance sheet, for all the responsibilities for market steering to be sat with someone else, for all of the risk of variable costs and margins to be sat with someone else and for us to be able to invest our capital somewhere else, that is highly attractive.

“But, for that to be achieved, that requires true agency. If I look at it through the consumer’s lens, true agency should give utter price transparency. It should get simplicity from where and from whom you get your vehicle.

“And in terms of enabling omnichannel sales, really the only mechanism for that is agency. But this is where it falls down. Where agency was brought into the market, it was not looked at through that lens. It was a version.

“It was we want the benefit of reducing dealer margins, having greater transparency on cost to the consumer, but we don’t want to take back as the OEM the liability of the inventory and when it comes to market steering, we kind of need the dealers to do the deals. And that’s where it stuttered.

“My view is agency will come at some point. And it will end up as the true definition of agency where the transaction gets done through the dealer and that’s role, we are all looking forward to.

Many have come out with a quasi-form of agency, which takes the upside back to the OEM and the downsides pushed towards the dealer. And that’s where it has fallen over.

“I think it [agency] will come, it is not the work of the devil but it has to be delivered in the true sense. The market has not got itself ready for it yet. But we should not be afraid of it if it comes, and I am sure it will come at some point.

 

 

 

 

 

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