Direct Sales Plans Unravel as Factories Face Reality
Automotive News’s Nick Gibbs reports automakers eager to adopt a direct sales model in European markets have abandoned those plans as obstacles — including dealer opposition and technological challenges — have proven insurmountable.
At last week’s Automotive News Europe Congress, Gibbs writes, United Kingdom- and Germany-based dealer consultant Steve Young told the crowd that BMW, Mercedes-Benz, Stellantis and Volvo, among others, were led to believe controlling sales and pricing would improve profitability.
“The manufacturers were sold something that was just not true,” said Young, the managing director of ICDP. “They were told they would have a lower distribution cost, they would have a fixed price, and life would be simple. That wasn’t the reality.”
The factories were led astray in part by Tesla, Young notes, which succeeded without the benefit of franchised dealers in COVID-era Europe.
“Having good margins and good pricing in a supply constricted world is easy. When the supply is exceeding demand, as it is now for everyone including Tesla, then you need to have some form of dynamic pricing.”
