Agency model

What the agency retail model could mean for Lotus and its customers | Autocar

The British manufacturer isn't the first to adopt this way of selling cars, but it has significant implications for its small retailer network

www.autocar.co.uk

 

[Tonyshepp]

What the agency retail model could mean for Lotus and its customers | Autocar

The British manufacturer isn't the first to adopt this way of selling cars, but it has significant implications for its small retailer network

www.autocar.co.uk

i can see how this can protect depreciation, as discounts off MSRP always meant that the purchase price was variable and this had an impact on cars sold without this discount. Times they are a changing...

 

[roundincircles]

i can see how this can protect depreciation, as discounts off MSRP always meant that the purchase price was variable and this had an impact on cars sold without this discount. Times they are a changing...

My understanding is that agency model will not stop discounts but it will stop inter dealer rivalry which leads to extra discounts above manufacturers support.

The agency model puts price setting in the manufacturers hands so when output exceeds demand they set a lower price, albeit temporary if demand recovers , the dealers simply receive a set fee for each sale. Thus the Manufacturer drives selling price points and by definition discounts.

As the agency dealer has a fixed fee per sale they have no incentive to reduce that fee, under the franchise system the dealers are encouraged to discount to win monthly and quarterly cash backs based on reaching units of sale by dropping margin to win sales.

In the Lotus case it’s fair to assume discounting will be absent until the order book softens.