Volvo moves to agency model

[Krh134]

Basically, Volvo has taken the Dealer Margin and made buying a car non-negotiable.

I will be holding onto mine for a few more years then.

[Philip Fisher]

Originally Posted by Krh134

Basically, Volvo has taken the Dealer Margin and made buying a car non-negotiable.

I will be holding onto mine for a few more years then.

Well yes and no. The dealers will still have to be paid, so in theory some dealers might try and trim their payment to get the sale. It will be interesting if this will be allowed under Volvos rules.

For example, if a dealer gets 2k for selling a car, then if they accept only 1.5k and find a way to refund 500 quid to the customer (by inflating the part ex price for example) and can sell a car to 2 customers instead of one then they are quids in. Just how possible this will be is the million dollar question....

[Ulrikas PA]

Originally Posted by MK09

I understand the reasons for moving to this model, but from a personal perspective, I’m struggling to see any benefits for me. I don’t need the car buying process to be simplified. It’s simple enough to phone or visit a few dealers and give my custom to the one that offers me the lowest price.

100%

The manufacturers / importers are totally disingenuous when they pretend that it's about 'simplifying the process for the buyer'. It's about maximising profits.

[MikeGMT]

As of June this year my PCP came to it’s close, and for many of the reasons highlighted in this thread I decided to end the finance and keep the car. I suppose I’ll get used to driving the old jalopy, and will just wait and see how things pan-out in the next few years.

One thing I fail to understand, mention has been made a few times about being tied to the manufacturer, especially if using PCP to finance. My own personal experience has been go and get any flavour of badge you fancy, the dealer will get a settlement figure and pay the outstanding finance. As long as the outstanding balance is paid the finance company is happy. So I’ve never thought of it as being locked in to one manufacturer.

[Krh134]

Originally Posted by Philip Fisher

Well yes and no. The dealers will still have to be paid, so in theory some dealers might try and trim their payment to get the sale. It will be interesting if this will be allowed under Volvos rules.

For example, if a dealer gets 2k for selling a car, then if they accept only 1.5k and find a way to refund 500 quid to the customer (by inflating the part ex price for example) and can sell a car to 2 customers instead of one then they are quids in. Just how possible this will be is the million dollar question....

I suspect the dealers will be paid for transactions, such as PDI, handover, handling trade in etc. So I doubt the retailer will be able to negotiate on a sale.

[Philip Fisher]

Originally Posted by Krh134

I suspect the dealers will be paid for transactions, such as PDI, handover, handling trade in etc. So I doubt the retailer will be able to negotiate on a sale.

I know they won't be able to officially negotiate, but if they are paid, then surely there is always the possibility they will chose to be paid less to drive more volume (which is exactly what happens at the moment with dealer margin)?

[Ian0803]

Since the cars in the showroom will always be owned by Volvo, there will be no financial contract/transaction with the dealer, only Volvo, so not sure how dealers would be able to pay money to a customer without any sales contract in their name.
Perhaps they have scope to discount accessories and servicing to drive sales and for privately owned vehicles, offer more attractive trade in values, which may push up secondhand prices.

[JonathanD]

Originally Posted by Ian0803

Since the cars in the showroom will always be owned by Volvo, there will be no financial contract/transaction with the dealer, only Volvo, so not sure how dealers would be able to pay money to a customer without any sales contract in their name.
Perhaps they have scope to discount accessories and servicing to drive sales and for privately owned vehicles, offer more attractive trade in values, which may push up secondhand prices.

I rather doubt dealers will be able to do anything on the trade-in front. If the new car purchaser's contract is direct with Volvo with Volvo setting the new car sale price, then it only makes sense for Volvo to be buying the trade-in from the new car purchaser and setting the trade-in price, with the dealer processing and selling the trade-in on Volvo's behalf, Volvo setting the sale price for the trade-in.

I would assume demonstrators will now be owned by Volvo rather than by dealers and provided to dealers under the agency terms, so once their time as demonstrators is up they would end up being sold by dealers on Volvo's behalf, Volvo again setting the sale price.

Over time it is inevitable that Volvo will secure a total stranglehold over all new and used car sales through dealers. Perhaps dealers could continue to buy used cars from auctions to retail as used cars, although I would not be surprised if Volvo has this closed off this possibility in the agency terms by preventing such cars being retailed as 'approved' used cars and instead centralising this long-established practice by Volvo buying used cars from auctions and getting dealers to sell them on Volvo's behalf as 'approved' used cars at prices Volvo sets.

So as others have said, despite what any Volvo PR spin to the contrary would try to have us believe, the move to the agency model is 100% about benefitting Volvo and 0% about benefitting customers, which goes completely against the spirit of the founding principle of Assar Gabrielsson and Gustav Larson which had people at the centre: "Cars are driven by people. The guiding principle behind everything we make at Volvo, therefore, is and must remain, safety."

[Discoman]

Volvo is really backing itself into a corner here. By not offering discounts and already needing to offer zero/near zero APR then it has nowhere to go to bring in more volume when necessary other than launching new model trims which offer more spec and/or might be cheaper. This is something which is hard to do for a manufacturer which does not change its models that often.

For me, replacing my car with new costs nearly 60% more than what I paid in 2019. I don’t know what planet they thing customers are on in terms of affordability/willingness to be taken for a ride for this to end well for them.

[Ulrikas PA]

Originally Posted by Discoman

For me, replacing my car with new costs nearly 60% more than what I paid in 2019. I don’t know what planet they thing customers are on in terms of affordability/willingness to be taken for a ride for this to end well for them.

A friend of ours has done exactly the same this week -I'm sure they said their new XC90 was about £90k!

Well they can afford it, but I struggle to comprehend its value for money, as you can keep a car for 10 years and buy a Volvo warranty every year until then. That would cost you say £5k for years 4-10 rather than another £30 or £40k for a marginally improved vehicle...