De Meo stated that company is especially dangerous as volumes enhance. An organization that sells about 100,000 vehicles a 12 months would sometimes maintain 30,000 vehicles, or a 3 months’ provide. At an bill worth of 25,000 euros, that interprets to 750 million euros of capital, he stated.
But that determine could be within the billions for a corporation reminiscent of Renault that sells 2 million vehicles a 12 months, he famous.
De Meo stated {that a} no-haggle coverage may be problematic.
“You do agency because you want to control the price and you want to cut distribution costs,” he stated. “So you give a 5 percent margin to the dealer, there’s no discount – but you need to have a very unique product not to offer discounts.”
Renault has negotiated separate supplier contracts for EVs such because the Megane E-Tech. De Meo stated the bottom margin could be increased than 5 p.c (a typical stage for company contracts).
“We need the dealers to make money because if you cut their margins, you don’t help them to reduce unnecessary costs by asking them to build showrooms that are like temples or cathedrals,” he stated.
“You know what they will do? They’re going to say, thank you very much, I’m going to go to a brand that gives me a higher margin,” de Meo stated. “When you make this decision [to go to an agency model] you need to know how sales and marketing and distribution works in the automotive business.”
Source: europe.autonews.com
