Automotive industry Sales | New

BMW and Mini could switch to a direct sales agency model in Europe, but the local subsidiary of the Bavarian group says it has no plans – for the time being – to follow this example.

BMW Group Sales and Marketing Director Pieter Nota recently told Automotive News Europe (ANE) that while the timing of the decision is yet to be confirmed, the agency model could be applied to the BMW and Mini brands. by 2024 and 2026 respectively.

The development follows similar moves already underway within the distribution networks of BMW’s main competitors – Audi (e-tron models only) and Mercedes-Benz.

“We are currently in discussions with our European dealers about moving to a true agency model,” Nota told the publication.

“If we move to the agency model, it will be for the whole range (apart from the luxury brand Rolls-Royce of the BMW group, which will remain under the franchised dealer model).

Mr Nota said the agency model would only be used in Europe and the Chinese and North American markets “are not on the table at the moment”.

Speaking to GoAuto this week, a BMW Group Australia spokesperson said the Melbourne-based company had no plans to implement an agency sales model at this stage.

“Together with our dealer partners, BMW Group always strives to offer its customers the best premium experience,” the spokesperson said.

“With changing customer expectations, increasing digitalization and the expansion of online vehicle sales, BMW Group sees the future of Europe as a direct sales model.

“This is currently being developed with dealer partners who will continue to be the backbone of our business’ sales success (but) the focus is on Europe and there are no current plans. to modify the existing sales model in Australia.”

Under an agency-type model – which already applies to Honda, Mercedes-Benz, The North Star and You’re here vehicles sold in Australia – manufacturers invoice customers directly and hold inventory, while dealers receive a fixed fee for each vehicle delivered.

BMW was one of the first manufacturers to implement an agency model in Europe when it launched its I sub-brand in 2013. Although the brand abandoned the agency model a few years later, it began testing the program in its South African market in 2020.

The agency-style sales model should offer consumers a transparent and equal price between what is advertised online and what is agreed in the showroom. Manufacturers say the model reduces inventory and advertising costs for dealers, while eliminating cross-dealer shopping and haggling between sales staff and customers.

In Europe, luxury brands (including BMW) typically offer dealer margins of between 12-16%, with amounts varying by model range and market location.

ANE says that under an agency model, sales commissions should be cut in half, but Mr Nota declined to say whether BMW and Mini would move to single-digit commission.

Besides Audi (e-tron), BMW, Mercedes-Benz and Mini, Stellantis and Volkswagen Group brands have also signaled plans to move to the agency model in a bid to “get more control over the sales process”.

Stellantis has previously said it plans to move to an agency-like model in Europe from June 2023 for brands including Alfa Romeo, Citroën, DS, Fiat Professional, Lancia, Opel, Peugeot and Vauxhall.

The Volkswagen Group is already using an agency-like model to sell ID and e-tron models, while the Cupra brand is moving to what the ANE describes as “a non-genuine sales model”.