Currently reading: Online car sales will always co-exist with dealerships, says Polestar UK boss
Retailers play a vital role in customer experience after an online transaction

As the trend for online car buying grows, the ongoing presence of physical retailers will still play a crucial role. That’s the view of Polestar UK CEO Jonathan Goodman, talking on today’s Autocar Business seminar about the agency model of car selling.

Goodman said: “The car business is going to move online. It doesn’t mean purely online. There will always be a need to interact with a physical property."

He continued: “If anyone doesn’t believe it’s going online, they’re living in the dark ages. All players in the business have to be ready to move online or they will be left behind.

“The big question for the industry is how do we marry the two? We need to enable retailers to deliver exceptional customer care while offering direct interaction with the brand elsewhere. That’s the challenge the industry has.”

Goodman predicts the significant footprint that today’s dealerships have will not be so relevant in the future. “Do we need the same size of showrooms which are built up around the country? I think we’ll see that gradually reducing.”

Tony Whitehorn, an automotive consultant at Endiva who has previously worked for Hyundai and Toyota, said: “Some manufacturers are starting to push it - Stellantis and Mercedes, for example - and others are holding off and waiting to see. At the end of the day, it’s what the customer wants. It will be something along the lines of a direct model enabled online but with a localised facility for that face-to-face interaction.”

Goodman, Whitehorn and the seminar’s third speaker, Lookers COO Duncan McPhee, said the agency model – in which a car has a fixed price and a customer places an order directly with a car maker (often online), which then provides a fixed commission to the relevant local retailer – is a positive move for customers in terms of pricing.

McPhee said: “The agency model keeps everybody honest and on their toes and customers will massively benefit from that. It’s good for customers, rather than bad for customers.”

Goodman added: “If consumers feel you’re overpricing your cars, they vote with their feet. [This model] enables you to retain some of the profit which would have been negotiated away. Customers know it’s an honest price. You don’t go into other shops in other industries and start haggling over the price of a handbag or suit."

He added: “It’s irritated me massively as an industry that we spend £250 to £300 million pounds developing a new car and then start discounting it as soon as it’s on the market. I don’t think the customer ends up paying more for this at all. It enables us and retailers to make a profit as well as the customer getting a fair price for a car.”

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