Direct sales model likely for BMW and Mini within Europe, no plans for Australia
BMW and Mini could move to a direct-sales agency model within Europe, but the Bavarian group’s local subsidiary says it has no plans – at present – to follow suit.
BMW Group sales and marketing director Pieter Nota recently told Automotive News Europe (ANE) that while the timing of the decision still had to be confirmed, the agency model could be applied to BMW and Mini brands by 2024 and 2026 respectively.
This development follows similar moves already underway within the distribution networks of BMW’s primary competitors – Audi (e-tron models only) and Mercedes-Benz.
“We are currently talking with our European dealers about a move to a genuine agency model,” Mr Nota told the publication.
“If we will move to the agency model, it will be for the entire range (apart from the BMW Group’s Rolls-Royce luxury brand, which will stay under the franchised-dealer model).
Mr Nota said the agency model would only be used in Europe and that Chinese and North American markets are “not on the table at the moment”.
Speaking to GoAuto this week, a BMW Group Australia spokesman said the Melbourne-based firm 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 customer expectations changing, digitalisation increasing, and the online sale of vehicles expanding, BMW Group sees the future of Europe as a direct sales model.
This is currently being developed together with dealer partners who will continue to be the backbone of our company’s sales success (but) the focus is on Europe and there are no current plans to change the existing sales model in Australia,” he added.
Under an agency-style model – which already applies to Honda, Mercedes-Benz, Polestar and Tesla vehicles sold in Australia – manufacturers invoice customers directly and hold inventory, while dealers receive a fixed fee for every 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 trialling the program on in its South African market during 2020.
The agency-style sales model is expected to offer consumers a transparent and equal price between that advertised online and what is agreed upon on the showroom floor. 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) generally offer dealer margins of between 12 and 16 per cent with amounts varying according to the model line and market location.
ANE says that under an agency model, sales commissions are expected to be halved, but Mr Nota declined to say if BMW and Mini would move to a single-digit commission.
As well as Audi (e-tron), BMW, Mercedes-Benz and Mini, Stellantis and Volkswagen Group brands have also signalled their intention to switch to the agency model in a bid to “have greater control over the selling process”.
Stellantis said previously that it plans to move to an agency-style model within Europe from June 2023 for brands such as Alfa Romeo, Citroen, DS, Fiat Professional, Lancia, Opel, Peugeot and Vauxhall.
The Volkswagen Group already uses an agency-style model to sell ID and e-tron models, while the Cupra brand is moving to what ANE describes as “a non-genuine sales model”.