Just a question for some research that I am doing.
Are new car dealers agents or principal in a transaction.
An agent is someone that acts for the principal (owner of the goods) and as such never owns the stock that it sells.
A principal makes or buys thier stock then sells it on.
Any help appreciated.
Thanks
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I think the answer is that they are agents although Mercedes did try and do away with agents and appoint principles a few years back.
I obviously do not know what your research is about but the way manufacturers view or treat their dealers is very different - IMO.
I do know the Japanese companies consider their dealers (agents) as part of their overall company strategy becuase they value the importance of the interaction with the customer - just look at Lexus for instance.
Honda also talk of the 3 joys in their company strategy - buying, selling and creating.
All 3 are considered equally important so obviously they place great importance on the dealerships (selling).
Toyota state: The customer first, then the dealer, and lastly the maker.
I am not saying that western car companies are not interested in dealers or customers becasue they are. It's just that the research I have done suggests that the dealers do not feature as highly in their corporate thinking.
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For the most part they are agents. Having worked with/for a number of manufacturers I know that some see the dealer as the 'customer' ! i.e. they sell the cars to the dealers and don't want to know much after that... The problem for the dealer is that Joe Public often sees the dealer and manufacturer as the same entity.
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OK, I'm mixed up here. I think what happens is that the dealer buys the stock.
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>>and appoint principles a few years back.>>
Did these principles involve providing the best after sales customer care and service?
I know one of my mates has given up the marque for the moment because he wasn't happy with this aspect and he was someone who spent many, many thousands of pounds on his vehicles over the years.
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What\'s for you won\'t pass you by
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Whilst not certain, so of little use to you, I'm not sure they are agents at all in the legal sense that you mention. If the dealer is not owned by a manufacturer, then they usually hold a franchise agreement, which does not give them powers to act for the principal. Did motor trade law 1973, and the grey cells are not quite what they were! things change too.. tempus fugit.
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Dealer stock is usually S.O.R unless bought by the dealer. Stock is normally SOR for a set time, but dealers are tempted by incentives to 'adopt' or buy cars early, and register them for bonuses. When I say SOR, that's the theory. In all my years in retail, I never ever heard of anyone sending one back! Take 3 Brand new model Astra SR's for example, sent as launch stock in reed green! Try sending that lot back. They ended up adopted and on the rental fleet for a hefty write down.
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When I say SOR, that's the theory. In all my years in retail, I never ever heard of anyone sending one back!
I presume, though, that this makes it a lot easier to move cars around within the dealership network.
I guess on thing that complicates the legal status / relationship of dealerships is that some are now owned by manufacturers. I understand that MB owns many of the 'big city' dealerships, and that Ford and particularly Peugeot own dealerships.
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Are new car dealers agents or principal in a transaction. An agent is someone that acts for the principal (owner of the goods) and as such never owns the stock that it sells.
I am an agent in a different industry, and my relationship is exactly as you say.
A principal makes or buys thier stock then sells it on.
I would imagine that most car dealers would be principals. Although they may not own their stock, while it is 'stock', once it's sold they would then pay the manufacturer for it.
It's quite normal (might even be mandatory now) from an accounting point of view, for manufacturers to not regard items as sold until they have passed into the hands of the end customer.
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in the accounting sense the stock or car is stock once it can not be returned without fault - its all about risks and rewards
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>>Did these principles involve providing the best after sales customer care and service?<<
My understanding was they would - it was all part of the attempt to improve customer care and improve profits in as much as MB UK would take all the dealer mark up.
Alot of dealers were threatened with closure and Mercedes Benz Centres would appear in other area's
But as I say I think the knocked the idea on the head ofter the all the aggro it caused.
Can anyone else remember this story or do I just have funny dreams.
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My understanding was they would - it was all part of the attempt to improve customer care and improve profits in as much as MB UK would take all the dealer mark up.
I thought it had gone ahead, pretty much as you decribed, with DC-UK Retail owning many of the big city dealerships, and plans for customer experience centres (hasn't the Brooklnds one just opened?).
{Message trimmed down. There is NO need to quote ALL of the text to which you're replying to. Just a brief summary or "in reply to xxx" is enough. See the sticky message at the top of this page ( Responding to posts) for further clarification - DD}
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Although a lot of dealers are now owned by the manufacturers, Ford and MB inparticular, it may make sense for them to be registered as seperate limited companies so legally they could still be agents or franchises.
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As a percentage of total dealers in the UK the amount owned by the manufacturers is small. There are 7 manufacturer owned dealer groups. The biggest is Daimlerchrysler Retail which own MB franchises in London, Birmingham and Manchester. The others are Ford Retail, Reagroup (Renault), Robins & Day (Peugeot), Porsche Retail Group, Citroen Retail Group and Aprite (Nissan). These companies are (as cheddar suggested) seperate limited companies that like other dealerships own a franchise and are not agents.
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Thanks everyone for your help.
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