Franchised Retailers Push Back Against Agency Agreements

Franchised retailers are unhappy with their manufacturer partners over the introduction of agency agreements.

This is after Mercedes-Benz, Volkswagen Group and Volvo issued agency agreement consultation documents.

Retailers fear the agreements will adversely impact the profitability of their business and their ability to offer the best experience to customers.

The NFDA has begun seeking legal advice in preparation for the issuing of agency contracts.

NFDA director Sue Robinson said: “We’re seeking legal guidance in general. We’re looking at agency agreements in pure terms as well as what is a hybrid agreement. We need to get to the definition of these before we can go to the manufacturers. We need to be clear legally before we do that.”

Retailers say the Volkswagen Group document appeared to set out a “non-genuine” agency agreement where there was fixed pricing at a national level, yet retailers would be able to negotiate with customers by giving away their handling fee.

VW Group declined to comment on this possibility and said: “At this early stage any comment with respect to the shape or form of an agreement is speculative at this time.” However, in its response it limited the agency comment to VW, VW Commercial Vehicles, Audi, Seat, Skoda and Cupra and did not include VW’s other car brands Bentley, Lamborghini, Porsche and Bugatti.

Mercedes-Benz’s document is understood to set out a true agency agreement covering a realistic level of showroom costs.

Volvo’s document on agency agreements is believed to have included new and used cars, and was rejected by the dealer council.

Meanwhile, Mark Raban, CEO of Lookers, speaking after the Lookers annual results, called for a standardisation with agency agreements.  “Our brand partners seem to want to be taking their own approach. That’s going to give us a challenge in terms of our consistency and standardisation agenda.

“We’re absolutely engaged on discussions. We’re not opposed one way or another, but think there needs to be a lot more thinking on both sides.”