Americas Dealership Markups (North America)

[Shopkeep]

The current shortages won't last forever.

The same Agency system was pioneered by home appliance companies like Miele in Australia to minimise natural retail competition and control the price of their products and services. The consumer does not win, only the Supplier does.

 

[DaveB]

The current shortages won't last forever.

The same Agency system was pioneered by home appliance companies like Miele in Australia to minimise natural retail competition and control the price of their products and services. The consumer does not win, only the Supplier does.

Can I assume from your name that you work in the retail sector?

 

[ECrider]

It's and interesting point. Would you not think it probably evens out on the end. Like how we are now seeing huge mark ups on LR's that have 30miles on the clock and are now 2nd hand according to the dealers? If there was more discounting than RRP going on then the dealers would likely fold? Surely they are always 'up' like the house of a casino?

Agree shortages will not last forever, but I find the good vehicles in demand you might get a few car mats thrown in rather than 10% off.

 

[DCPU]

The key here is disruption.

Markets need this from time to time to have a think, challenge the status quo and maybe move what can be deeply entrenched vested interests.

The American model of dealers being mandated rather than manufacturers selling direct was established when many dealers were "Mom & Pop" family businesses. Today, many of these dealerships have been swallowed up by larger and larger corporates.

It's got to be be wasteful to fill huge car lots with inventory, in the hope that someone will wander around on a Sunday morning and pick one to take home that day.

The question remains to be seen whether stripping out these wasteful costs will just improve margins for the seller, or whether some will be shared with the buyer.

 

[Shopkeep]

Can I assume from your name that you work in the retail sector?

The key here is disruption.

Markets need this from time to time to have a think, challenge the status quo and maybe move what can be deeply entrenched vested interests.

The American model of dealers being mandated rather than manufacturers selling direct was established when many dealers were "Mom & Pop" family businesses. Today, many of these dealerships have been swallowed up by larger and larger corporates.

It's got to be be wasteful to fill huge car lots with inventory, in the hope that someone will wander around on a Sunday morning and pick one to take home that day.

The question remains to be seen whether stripping out these wasteful costs will just improve margins for the seller, or whether some will be shared with the bu

My username may give away my retail background!

The question is being answered in Australia at the moment; Mercedes and Honda recently moved to an Agency system and the prices of their vehicles have not gone down. The dealers accept a smaller margin in return for not having cash tied up in stock, the Supplier increases their share of the margin. Once the Supplier gains more control over the sales process they normally rationalise the dealer base to reduce the amount of cash the Supplier needs to invest in demonstration stock at each dealer.

Same thing happened when Miele pioneered the Agency system, and the pricing of their goods went up over time as dealers were not fighting between themselves to close a deal.

The irony is the appointed Ineos dealer in Melbourne lost their Honda dealership as part of Honda's move to an Agency system!

 

[Davman]

The irony is the appointed Ineos dealer in Melbourne lost their Honda dealership as part of Honda's move to an Agency system!

Well if they dealt with their Honda customers the same way they deal with their potential INEOS customers, then I think I know why Honda didn't want anything to do with them.

 

[DaveB]

My username may give away my retail background!

The question is being answered in Australia at the moment; Mercedes and Honda recently moved to an Agency system and the prices of their vehicles have not gone down. The dealers accept a smaller margin in return for not having cash tied up in stock, the Supplier increases their share of the margin. Once the Supplier gains more control over the sales process they normally rationalise the dealer base to reduce the amount of cash the Supplier needs to invest in demonstration stock at each dealer.

Same thing happened when Miele pioneered the Agency system, and the pricing of their goods went up over time as dealers were not fighting between themselves to close a deal.

The irony is the appointed Ineos dealer in Melbourne lost their Honda dealership as part of Honda's move to an Agency system!

Strange part is that the opposite is happening in the grocery market. The retailers are introducing their own brands, or creating fake brands, which allows them to change supplier but retain the same brand. This allows them to screw suppliers down in price while they retain the same sell price. They can then easily change from local supply to imported and nobody notices. Until COVID hits and they suddenly can't get the imported product anymore.

 

[Shopkeep]

Well if they dealt with their Honda customers the same way they deal with their potential INEOS customers, then I think I know why Honda didn't want anything to do with them.

I think the delay in production may suit Brighton Automotive Group, anyone aware of what their showroom plans are? The old Nissan lot on Nepean Hwy was closed and cleared months ago and is still empty, there has been no major activity on the site as yet. Hope it's not just a portable office out the back of the Renault/Suzuki/Alpine site.

 

[emax]

As usual, it depends. In the current context, think of two scenarios:

Low product availability:
Dealers will add an extra margin as demand is high and availabilty is low.
Agents can't. Only the manufacturer is setting the price. Can go up, but might stay stable as well.

High product availability:
Dealers will bargain away the product as demand is low but availablity is high. This will destroy the products market value.
Agents can't. Only the manufacturer is setting the price. Can go down, but might stay stable as well.

Grenadier belongs to the first scenario - currently.

 

[DCPU]

Hope it's not just a portable office out the back of the Renault/Suzuki/Alpine site.

Would that be more in keeping with Ineos' philosophy of no gin palaces? After all, the vehicles should be the focus of attention...

 

[Shopkeep]

Would that be more in keeping with Ineos' philosophy of no gin palaces? After all, the vehicles should be the focus of attention...

If they are going to control the sales process Ineos should offer a factory delivery option for those of us in the colonies; pick up from Hambach, drive around Europe on holiday for a few weeks or months and then drop off in Zeebrugge for shipping to its final destination.

 

[DaveB]

If they are going to control the sales process Ineos should offer a factory delivery option for those of us in the colonies; pick up from Hambach, drive around Europe on holiday for a few weeks or months and then drop off in Zeebrugge for shipping to its final destination.

I guess that would be great for the 12 people who are going to do it.
They have started a new company and are bringing an entirely new vehicle to market.
So many things to do globally and we want them to plan for the 20, 50, 200 people who want to pick up from the factory?
Even if it was 1,000 people it is still an unnecessary distraction at this stage.

 

[DCPU]

If they are going to control the sales process Ineos should offer a factory delivery option for those of us in the colonies; pick up from Hambach, drive around Europe on holiday for a few weeks or months and then drop off in Zeebrugge for shipping to its final destination.

It's on a list to hopefully be done.

Discussed here:

https://www.theineosforum.com/threads/european-delivery.12379998/

 

[DCPU]

I guess that would be great for the 12 people who are going to do it.
They have started a new company and are bringing an entirely new vehicle to market.
So many things to do globally and we want them to plan for the 20, 50, 200 people who want to pick up from the factory?
Even if it was 1,000 people it is still an unnecessary distraction at this stage.

I guess they could get the bloke organising the side protection bars to sort it, I'm thinking he's woefully underemployed and probably feeling quite exposed.

Let's not forget what started this vehicle off (I know it's long before your interest in this project), and the voices from the ether who said it would fail because there was no market for it...

 

[Nick]

Agency model will work only if get dealership buy in with appropriate incentive
must admit nervous about Brighton automotive as haven’t followed through on queries
in current market maybe more invested in their other brands
wouldn’t be surprised if delivery delay associated with dealer installed components - sidesteps, bullbars etc

 

[Dilusha]

Hello everyone! This is my first post here.

Btw, do we know what the base price would be in US?

 

[Caladan]

Be careful what you wish for. The system Ineos (and others) uses might stop dealers from charging additional markups, but it also removes any ability to offer a discount to gain your business. Nothing motivates a retailer of any type of goods more than having a whole bunch of cash tied up in inventory sitting in your warehouse or on your lot.

I view it as a restrictive trade practice and anti free market, I would have thought it was very in character for US States to reject this model of business.

I think it’s actually a gutsy move by INEOS to try this sales model. It brings “choice” to the consumer in in the US auto market. And the final decision maker on whether this sales model will survive will be the US car buyer. We’ll either love it or hate it and decide accordingly. And INEOS will either succeed, change or die. That’s the free market at work.

 

[bemax]

Hello everyone! This is my first post here.

Btw, do we know what the base price would be in US?

Hi Dilusha,
the prices for the US are not out yet.

 

[Sebastian]

Ineos Automotive as trendsetter? --> BMW about to change to an agency model in Germany starting 2026 and Mini already in 2024 according to press (https://www.sueddeutsche.de/bayern/...urn-newsml-dpa-com-20090101-221208-99-829216; https://europe.autonews.com/automakers/how-bmw-will-revamp-its-retail-network-digital-age)

 

[DCPU]

More and more looking to move to increase their direct involvement with buyers and look to sell subscription services.