Car manufacturers enter distribution and park the dealer

Dealer networks have accumulated two years of insignificant returns as a result of the pandemic and a market that has not fully recovered pre-pandemic volumes.

However, added to the general market situation is the change in the conditions of their contracts with car companies. The main reason is that “manufacturers are making a series of very important investments for the transformation to the electric vehicle and they have to be financed in some way, such as through cost reduction”, as he explains to the Economist the senior advisor of the consulting firm Roland Berger, Pablo Tellería. In his opinion, “manufacturers want to reduce distribution costs to undertake these investments in electric vehicles”.

Another reason why car companies are opting for this type of agency contract “is because the car has more and more software and right now the brands do not see each other as competitors. As the electric vehicle is going to be less difficult to produce and will have much more software they want to have information about the client,” says Tellería.

Thus, consortiums such as Stellantis, Volkswagen Group or Mercedes-Benz have already presented their networks with the new distribution contracts. However, these new contracts, called agency contracts, are distinguished between genuine and non-genuine ones.

The president of the employer’s association of official dealers (Faconauto), Gerardo Pérez, points out to this medium that “in the end, what the agency contract intends is for the manufacturer to take a much more important role in the direct relationship with the consumer. genuine or non-genuine agency contract are the two types of contracts that there are let’s say that relegates the dealer to being a dealer What the manufacturers who establish an agency contract with their network are preparing is to have a direct relationship with the buyer so that can buy it online and that the network is dedicated to delivering these vehicles”. Likewise, Pérez acknowledges that Faconauto does not agree with these contracts, “but we do claim that limitation of direct sales so that, whatever our role, the sales of vehicles in the retail the dealers continue to make them”.

differences

In the case of genuine agency contracts, no liability of any kind is assumed. Thus, the networks do not have to comply with a series of standards or these are insignificant, nor are commercial or financial risks assumed, nor does it contribute to the costs of supply or acquisition of goods. In addition, this type of contractual relationship does not include the invoice on behalf of third parties, the community regulations do not apply and they strictly follow the designs of the principal.

For the corporate director of the official and independent vehicle distribution association (Ganvam), Jaime Barea, “if all these requirements are not met, we find ourselves before a dealer or distributor. The regulatory framework is different, because with the genuine agent We are in the scope of the agency contract law, while with the distributor we are in the competition regulations, through the Treaty on the Functioning of the EU and Regulation 330/2010”.

This type of contractual relationship has been chosen by the Stellantis group for its dealer network throughout Europe. In fact, the consortium has canceled a total of 129 contracts in Spainwhich represents four out of ten dealer contracts.

The vision of the Franco-Italian-American group is “to promote a sustainable distribution model based on an efficient and optimized multi-brand distribution network, which represents the brands locally and guarantees the development of sales and after-sales activities”, as it recognized last month of May.

Manufacturers opt for these contracts to reduce distribution costs

As explained by the group itself, with this new model “Stellantis dealers and brands will have a new and efficient business model aimed at creating synergies, optimizing distribution costs, increasing the degree of customer satisfaction and additionally offering business opportunities including a broader range of services, product lines, financing and mobility solutions”.

For Barea, the application of a genuine agency model does not imply the disappearance of the distribution network. However, Barea acknowledges to this newspaper that “we do not know in detail the profitability conditions that the networks would have in the future with this possible distribution model, and also, what consequence it may have in the long term with respect to customer loyalty.”

Likewise, Barea says that the application of genuine agency models by other groups “have not been proposed in general for the entire range of products (electric vehicles or specific models) or for all types of clients (fleets and commercial vehicles). ), but brands like Volkswagen or Mercedes in Spain and others in other countries are already considering other distribution models, but we will have to wait to find out the details and confirm whether they are genuine or not.”

Waiting for Regulation 330/2010

The community legislation that regulates vehicle distribution contracts expires next May. The Faconauto and Ganvam employer associations have worked with the European Commission with the aim of limiting direct sales by manufacturers. And it is that in Spain there is no specific regulation that regulates vehicle distribution contracts. A) Yes, from Ganvam they have asked the Commission that the percentage of direct sales by manufacturers be limited to 20%. Other manufacturers such as Renault have already established this limit with networks at a maximum of 10% of direct sales.