or over a century<\/strong> the auto industry has operated a B2B2C model with car makers (OEMs) wholesaling vehicles and parts to dealers who then retail these goods, packaged with additional services to customers, both private individuals and other businesses. This model has by and large been applied globally, with local variations due to industry structure and, importantly, regulation.<\/p>\n\n <\/div>\n\n \n\n <\/div>\n \t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t At least over the last several decades various tweaks have been made to mitigate structural weaknesses and cater to evolving markets and customer preferences. OEMs established direct sales channels, at first limited to government and large fleets, eg. rental car companies \u2013 and have expanded their coverage over the years, often in collaboration with their captive finance companies. There have also been some exceptions from the general rule, for example, (mostly) French and German OEMs owning retail outlets referred to as \u2018succursale\u2019 or \u2018Niederlassung\u2019 across European and some global markets. The retail networks also went through a continuous consolidation, reducing the number of outlets and more dramatically the number of owners\/investors across most markets. We saw the birth of mega-dealer groups with several hundred stores retailing a wide portfolio of brands. And we have numerous international retail groups today. But the underlying \u2018proven concept\u2019 has not changed a lot.<\/p> In the meantime, the emergence of eCommerce has turned many other retail industries upside down. In automotive we are mostly still talking about it. Yes, prospects and customers have moved a large part of their pre-purchase research and a similar part of their post-purchase discussions online, but very few customers have so far been able to acquire a new car online. Nevertheless, eCommerce and the digitalization has triggered an intense discussion about the future of auto retail. And the very foundation of the current retail network is being questioned: the franchised new automobile dealer.<\/p> \u2018Going direct\u2019 has become a buzzword, not least because Tesla has been \u2018going direct\u2019 from the start and by now owns and operates a global retail network that combines physical outlets with a comprehensive digital offering. Several other new players have \u2018gone direct\u2019 in more or less pure ways \u2013 take Polestar with their mostly digital and direct sales approach, backed by a physical service network, in the form of \u2018old-fashioned\u2019 Volvo dealers. The newly (SPAC-)funded US EV start-ups Lucid, Rivian and Faraday are in various stages of announcing and building their exclusive direct channels \u2013 with owned glitzy showrooms and versatile digital front ends.<\/p> This \u2018fully direct\u2019 approach is not an easily available option for incumbent OEMs with their existing dealer networks. But \u2018direct sales\u2019 does not have to mean owning your front-end \u2013 several OEMs are either testing or implementing (and many more are considering) a significant contractual change in their networks by converting their dealers to agents. New car sales will then be made directly by the OEM to consumers, while the agent may assist the customer in the process. Swedes and Austrians can now buy Mercedes-Benz cars this way, as can VW ID and Volvo BEV buyers in Europe.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t ARTHUR KIPFERLER<\/p>\n Partner & MD (UK)<\/p>\n arthur.kipferler@berylls.com<\/p>\n <\/div>\n Insight download and author information\n\n<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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