The Agency Model

Facing the Future of Retail Automotive
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The Agency Model

Friday's All Things Used Cars episode on Clubhouse was a full-force no brakes talk about direct-to-consumer automotive retail or the “Agency Model." David Long invited General Manager and VP of Paragon Honda, Brian Benstock, and Andrew Diffenderfer, Co-Founder of Foundation Driect, while welcoming thoughts and comments from the room's participants. 

In the last few years, OEM's European dealership collaboration has changed drastically. Many dealerships have diminished roles or have been closed completely. 

Brian Benstock and Andrew Diffenderfer shared what they have seen and predicted coming over the horizon for the industry. 

What is happening? Brian and Andrew discussed several instances of companies pushing toward direct-to-consumer retail. With European dealers being shut down despite operating at high levels, they ultimately boiled things down to profits. 

Dealerships currently make more than the automakers who supply new inventory. With Europe and Tesla showing there are ways to circumvent the strong US dealer protection policies, some companies are looking to electrifications as the opening for direct to consumer sales. 

The Kicker: This isn't a theory. It has already started here in the US. It has started at different levels across OEMs and states. There is no designated date and time when these switches will flip. 

What can be done? Brian and Andrew talked about US dealers in a "profit coma." Enjoying their times in recent years and convincing themselves nothing can happen to them. That has to change. 

Tesla's example shows rushing into a sans-dealership model could mean years of no profits at all, followed by layoffs, adjustments, and the kind of chaos you do not expect from companies with nearly 100 years under their belts. 

Learn and speak. Dealers who take the time to learn and commit to showing up and speaking up can lay a positive groundwork with policymakers and OEMs at their local level. About 17K rooftops and 10K dealers need a unified voice. 

Out of the frying pan... Brian Benstock spoke adamantly about the US's efforts to achieve energy independence. Finally, producing enough domestic energy no longer depends on the middle east. However, a push for electrification may lead to a whole new kind of dependence - Chinese batteries. 

Statistics indicate an exponential upward trend in EV adoption in the US. Urged by tax incentives and environmental factors, people are buying battery-powered vehicles at a rate only China can support. 

Opportunities. Identifying the shape and inevitability of changes helps to adjust to customer expectations. 

"Change, whether good or bad, is met with equal or greater confrontation" - Andrew Diffenderfer

A final tip. Be ready for EV shoppers by knowing and marketing your best alternatives. Add a 38+ MPG button to your website and let customers see options they can get in the rapidly selling market. 

Remaining a trustworthy and knowledgeable partner in the car buying experiences will keep customers returning no matter what disruptions occur. For many, what has been tested for generations is the method they trust when their time, money, and the livelihood of their family is in the balance. Dealers have always and will continue to provide superior returns on that trust. 

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