29 January 2023

One of the most emphasised themes from our Agency Conference last week was that in order for it to succeed, the retailer network needs to be fully ‘on board’ and supportive of the manufacturer to make it work.

This point was never more forcefully highlighted than by Australian dealer association chief executive, James Voortman. Speaking live to the conference about the experience of Australian Mercedes retailers, of which 80% are suing the manufacturer, he said: “The big issue is that the relationship is so fractured that it may not be recoverable.”

Auto Retail Agenda understands that while Australian Mercedes retailers expect to win their case and receive a substantial payout, they don’t expect to keep any Mercedes branding over their showrooms.

In the UK and Europe, Mercedes has clearly learnt some lessons.

The vast majority of retailers are very supportive of the brand’s move to agency, even with the few teething issues around how to handle company cars for sales staff and a lack of clarity on delivery times that have surfaced since the 1 January move.

Retailer-manufacturer harmony may be strong with Mercedes, but it’s not a core skill for Stellantis.

At the start of last week, Stellantis held its annual investor conference and, among a host of announcements around network changes, confirmed its timeline for agency with Alfa Romeo and DS as 1 January 2024.

However, after a day explaining the group’s plans (including a new market area approach with 177 investor partners) it then concluded the day by saying that if it had a blank sheet of paper for network planning, that 177 would actually be 40.

For an OEM group that dominates the lower order of the NFDA’s Dealer Attitude Survey (seven Stellantis brands are included in the bottom eight places; for reference, Mercedes is in the top two), it’s hardly a confidence-inspiring statement. And you have to wonder why the number 40 was even mentioned. What were the investors present in the room supposed to think?

Retailers we spoke to were not happy.

The message about 177 was clearly forgotten and all that was front of mind was the number 40.

One told Auto Retail Agenda: “They obviously don’t want small family-run single-brand businesses.”

Another said: “Stellantis clearly overestimates the value of its brands.”

A Stellantis spokesperson reassured Auto Retail Agenda that all 177 retailers had a future with the group and that well-run, successful smaller retailers operating even just one of the eight brands were part of this plan. They also added that all 177 are expected to stay with the OEM group and the only drop in that number would be from retailer consolidation or failure to meet standards.

Stellantis’ agency plans have already been delayed once, which is perhaps a good sign – a sign the manufacturer is giving more thought to agency and the host of retailer-OEM working groups.

While the agency contracts for Alfa Romeo and DS have been shared with retailers under NDA, perhaps a better indicator of their success will be how the brands perform in this year’s NFDA Dealer Attitude Surveys in March and September. If these surveys show improvement, agency implementation is likely to be more successful. Without it, increased frictions between the OEM and retailers are only to be expected. And with that as a distraction, the agency model end-goal of improved customer relations and greater distribution efficiencies become clouded.

* Read our full Agency Conference report plus the interview with Stellantis UK boss Paul Willcox in the February issue of Auto Retail Bulletin, out on 9 February.

* And for a full run-down of which brands are going agency and which are not, see our regularly updated list here.

Tristan Young

Editorial Director

Auto Retail Network

Tags: Agency Agreements, Alfa Romeo, DS, Stellantis