Why the Agency Model is a win for women purchasing a new car

by Petrol Mum

If the pandemic has taught us anything over the past two years, it’s that Australians have embraced online shopping wholeheartedly. It should come as no surprise then that Australian car companies are increasingly offering a better online shopping experience for the purchase of your next new car.

The business model for two relatively new comers to the Australian car market, Tesla and Genesis, has seen the traditional dealership network passed by the wayside. In their place are a small number of ‘car studios’ located in high traffic areas such as shopping centres. These are complemented by an online shopping platform where the price is fixed and you can simply select the model, trim, colour and payment method and even have your new car delivered direct to your door.

Considering the underwhelming role that dealerships play in the new car buying experience, particularly for women, I struggle to see the downside of this new car buying experience. Women routinely report poor experiences at dealerships, feeling vulnerable, and even feeling that they need to turn up with a male friend or partner to be taken seriously about the purchase.

Honda Australia and Mercedes-Benz Australia have now also introduced an agency-style business model. With Honda just over six months into the transition and Mercedes-Benz implementing it on 1st January 2022.

Honda Australia’s One Price Promise

Honda Australia’s revamped network comprises 90 Honda Centres across consolidated larger geographic areas, centralised marketing and stock management, and a ‘one price promise’ that delivers certainty of price and added value for customers. Honda’s own research found that over 90% of customers surveyed would be happy with no longer needing to negotiate a price.

“Many businesses outside of automotive have already realised an end-to-end customer experience that is simple, trusted and enjoyable, is the key to future success. Brand experience is the new competitive battleground, which is why we have shifted our focus from the auto industry norm of chasing volume, to prioritising a quality customer experience,” said Stephen Collins, Director, Honda Australia.

Every decision made by Honda Australia in re-engineering the entire business, has been made with the pursuit of an enhanced customer experience in mind. Honda representatives act on behalf of Honda Australia for the sale of new Honda vehicles to customers, with Honda Australia owning all-new vehicle stock, as well as all display, test drive and service loan vehicles required in each Honda Centre.

An online vehicle configurator is one of the major changes to Honda’s corporate website, which offers customers a simple and engaging way to view vehicle information and pricing, as well as ‘build’ the vehicle they are interested in purchasing. Customers will pay just one price regardless of which Honda Centre they visit anywhere in Australia, before adding any accessories, wherever they go, with no pressure to buy. Honda believe it’s a much more transparent and enjoyable way to buy a new car.

In terms of vehicle servicing and the ownership experience for customers, Honda have implemented the ‘Honda Road Ahead Guarantee’. Every new Honda vehicle purchased from 1 July 2021 still comes with a five-year unlimited kilometre warranty, but now also has five years of premium roadside assistance as well, plus a new vehicle service offering, where customers will pay the same low price of just $125 for each of the first five standard scheduled services on their new Honda vehicle.

This is an industry-leading service offering that includes both the base service items as well as adaptive service items, which were previously an additional cost item, when required. So, with the low-price service offering, the first five standard scheduled service intervals for every new Honda vehicle will cost just $625 in total – a saving, on average, of around $1,250 for the customer. And when you combine the service interval savings with the value of five years of premium roadside assistance, more than $2,000 of additional value has been provided to the customer with the Road Ahead Guarantee introduced under the new business model.

“Through our new ‘live’ customer feedback system, we’ve seen 89 per cent of customers strongly agree that buying a new Honda was exceptionally easy, while 87 per cent gave the new sales experience a top rating of 9 or 10 out of 10,” said Mr. Stephen Collins, Director, Honda Australia.

The network response to the new buying experience has also been extremely positive, with the Honda Centres embracing the change, recognising that customers have a significantly better experience under the new model.

“The switch to the new Honda agency model has been enormous for my business, with a significant level of change versus how we operated previously, but it’s been an extremely positive change at the same time,” said Mr. Tony Jowett, Managing Director Jowett Motor Group and Honda Area Executive at Eastern Honda and Northern Honda.

“With Honda Australia now holding all of the stock, we essentially have access to the national stock pool now and unlike many other brands, we can secure vehicles for immediate sale, so we’re really positive about what lies ahead for Honda in 2022.”

Mercedes-Benz Australia’s Retail of the Future

The Mercedes-Benz agency concept has already been introduced in Sweden, Austria, South Africa and India, and is expected to launch in New Zealand later this year, as well as Germany and the UK in 2023. Mercedes-Benz Australia has developed their Retail of the Future in consultation with their passenger car dealer network in response to changes in the industry, consumer behaviour and in the way new passenger vehicles are sold. This has coincided with the launch of an all-new on-line purchasing platform that enables the customer to select their preferred model and spec and see what stock is currently available.   

But things have not all been smooth sailing for Mercedes in Australia with around 70% of Australian Mercedes-Benz Agents involved in litigation after they signed new agreements to become part of Mercedes-Benz Australia’s Agency Model. A Federal Court hearing will go ahead in August this year with the case being a critical test of Australia’s Franchising Code of Conduct. 

“Mercedes-Benz Cars Australia has transformed its sales model to enhance its customer experience and offer price transparency on all new car purchases – as well as unlock access to its entire national vehicle stock to all Australian customers – with the launch of its innovative agency model this month,” a Spokesperson from Mercedes-Benz Australia told Driven Women Magazine.

“At the heart of this transformation is a focus to create a customer-centric experience that enhances the buying process by providing all customers with transparent, market driven pricing, more choice and greater convenience.

“All 64 Mercedes-Benz new car showrooms across Australia have transitioned to Mercedes-Benz Retail Agents and are an important part of the new process, offering a personalised and premium service to help customers configure and customise their new vehicle purchase to suit their needs,” concluded the Mercedes-Benz Australia Spokesperson.

Unlike Honda’s ‘Honda Road Ahead Guarantee’, the Mercedes-Benz agency model does not include a servicing component. This allows an opportunity for a dealership to enhance a customer’s experience by offering a better service experience. Features that I consider to be important for the customer include:

  • Fixed priced service cost;
  • Transparent information of what is and isn’t included in a standard service;
  • A loan car free of charge;
  • Asking the customer if they are interested in a particular model and offering them that model as their loan car while their car is being serviced;
  • Pick up and delivery of your car on the day of your service;
  • Or if waiting for the service to be completed a guaranteed finish time so you can plan your day around this; and
  • A pleasant area to sit while you are waiting for your car service to be completed that is clean, has varied reading material, a place to charge your phone or plug in your laptop and access to free wi-fi.

What the future holds for new car sales in Australia?

As more car companies move toward the agency sales model, further factors such as Corporate and Social responsibility may also come into consideration. Things like the percentage of women employed at the company and in what roles, how involved the dealership is with the local community and a car company’s environmental credentials, not just greenwashing, could all be looked at by potential customers.  

The transition to electric vehicles will also see more new cars being sold in this way because the difference between one car brand and another will become less, with electric vehicle infrastructure being largely universal. So, the customer experience will be of even more vital importance. Added to this, electric vehicles require less ongoing maintenance so servicing of a car at a dealership will also become less important.

I believe the implementation of the agency model for new car sales in Australia will be a positive for customers, particularly women. If there is no difference in price from one dealer to another, and proximity is not a consideration, then a customer may be more inclined to purchase from the dealer who treats them with the greatest amount of respect and can offer other sweeteners, be they be service or lifestyle related, to secure the new car deal.  

Photographs by Driven Women Magazine.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

error: Content is protected !!