Volvo moves to agency model

[Familyman 90]

Originally Posted by MK09

Just checked my dealer’s website and it appears that this 1.9% APR, full list price PCP ‘deal’ is the one they are now offering.

I checked this against a customer loyalty email they sent me in May. Comparing the 2 offers, both for an XC90 Core petrol over 49 months, with almost identical deposits (c£8k), and very similar optional final payments, the loyalty offer with discount, deposit contribution and astronomical APR worked out at £579pm.

The new low APR full list price offer is £679pm.

If Volvo are trying to encourage their existing owners to buy another car during this cost of living crisis, they’ve got a funny way of showing it.

To be fair to Volvo the cost of borrowing is only going one way at the moment.

[Ulrikas PA]

Originally Posted by T8Nic

Removing the dealer from the picture would probably lead to fewer dealers being around in the longer term.

Just like JLR is going through after franchise holders spent a fortune on new showrooms?

[T8Nic]

Originally Posted by Ulrikas PA

Just like JLR is going through after franchise holders spent a fortune on new showrooms?

Possibly, the product gets worse and the customer relationship too, not to mention potential job losses. But hey! Profit will be potentially higher and Mr Geely will be happy.

At the end of the day cars are commodities so the current trend is probably unavoidable.

[neilgorin]

I understand this is why there were a glut of prereg cars in May - dealers buying up the last they could via the wholesale route and registering them before the cut off.

Certainly this is where the car i just bought came in, there were loads of them around and a week later, all sold.

[techwatcher]

Originally Posted by T8Nic

Removing the dealer from the picture would probably lead to fewer dealers being around in the longer term.

Not sure it will make too much difference to number of dealers. My understanding is that dealers make much more money from servicing than selling new cars.

Also, I think there will always be a place for showrooms. Some people, me included, like to see, touch, feel and drive a car before buying or placing an order.

[James77]

What is an agency model?

[neilgorin]

Originally Posted by James77

What is an agency model?

Dealer gets a commission on selling a car for the manufacturer RATHER than the dealer buys the car wholesale and sells the car on.

It removes any option of discount at all as the dealer only handles the sale, you're buying from the manufacturer at their set price.

[Discoman]

Originally Posted by MK09

Just checked my dealer’s website and it appears that this 1.9% APR, full list price PCP ‘deal’ is the one they are now offering.

I checked this against a customer loyalty email they sent me in May. Comparing the 2 offers, both for an XC90 Core petrol over 49 months, with almost identical deposits (c£8k), and very similar optional final payments, the loyalty offer with discount, deposit contribution and astronomical APR worked out at £579pm.

The new low APR full list price offer is £679pm.

If Volvo are trying to encourage their existing owners to buy another car during this cost of living crisis, they’ve got a funny way of showing it.

Thanks for the. Summed it up well. Strangely if they had confidence in the agency model then a higher purchase price should lead to better residuals and higher GFVs so that the monthlies could be the same or indeed lower. Volvo clearly does not have much confidence in the changes it has made and/or is happy to try and live off lower volumes at higher margins. Gives us something to watch over time to see if they can make it work or if the offers get better come next winter.

[Crockers]

Or buy a Porsche. No discounts - long waiting times - but a car well put together and will hold onto more of its value.

[Philip Fisher]

Originally Posted by neilgorin

Dealer gets a commission on selling a car for the manufacturer RATHER than the dealer buys the car wholesale and sells the car on.

It removes any option of discount at all as the dealer only handles the sale, you're buying from the manufacturer at their set price.

What stops the dealer refunding you some of their commission as a sweetener? That is really no different to them than offering you a discount under the current model. In both cases it just reduces their margin.

I would imagine that bulk discounts and promotions for shifting models (ie introducing most customers) will still exist to motivate the good dealers. So potentially they could be using some of this rebate to entice more customers with some sort of dealer refund/servicing/accessory deal. Or would this be specifically banned with their agreement with Volvo?