BMW plans to transition its distribution network to a direct sales agent or “genuine” contract format in the near future. Discussions with operators have started and this decision concerns all of Europe.

The list of manufacturers working on an evolution of the distribution contract continues to grow. The latest is the BMW Group. A complete reversal since in December 2021, the Journal de l’Automobile had questioned all the manufacturers on their choices concerning future distribution contracts. At that time, and the end-of-year convention with the BMW network had confirmed it, the decision was rather to wait and reflect. “The current contracts run until October 2023. It is urgent for us to wait”, presented Olivier Philippot, director of sales and network development at BMW Group France.

Three months later, change of speech: “With the evolution of behavior of our customers and the development of digital, we believe that the best strategy is to retain the real agent contract in the long term”, presents Eymeric Lepoutre, since appointed March 1, 2022, future sales model manager at BMW France.

This agent contract as it is currently discussed at the German manufacturer includes the fixing of prices by the latter, the carrying of stocks and the final invoicing to the customer. Regarding the network’s other activities, namely second-hand, after-sales and spare parts, “there is no development planned”, he indicates.

European strategy

“This is a pan-European strategy, which includes the countries of the 27 as well as the United Kingdom, Norway and Switzerland”, explains Eymeric Lepoutre. For the moment, no timetable for the implementation of this new contract has been set. “We are at the beginning of the process continues Eymeric Lepoutre who was in his former position in charge of network development. We have started discussions with our network which will last until next fall, I insist on the term “discussion “, because the evolution of the contract does not in any way mean that we want to do without our network and that we are not listening to them. On the contrary. Our partners and their collaborators, such as the sales forces or our product geniuses have a very important role to play in this process and in the future organization. They are an integral part of the customer experience. Reception, testing, delivery are very important moments in the lives of our customers and we want our network is fully integrated in all these phases as well as many others.”

This type of contract is not new to the BMW Group. It was set up in South Africa in 2020. Above all, BMW inaugurated it in 2013 on the occasion of the launch of the “i” electric range, a unique distribution model at that time. As a reminder, it ended in 2019, the range reintegrating the distribution contract as we know it today. “Even if it was in a particular context with a range that was just as special, because it was the first electric cars, we learned a great deal from it which will serve us to draw up our future contract.”

Surprise in the network

If nothing is fixed yet, the agent contract, which concerns both BMW and Mini, risks leading to changes in the land. “We are going to work with our partners so that they can optimize the costs of their showroom, presents Eymeric Lepoutre. Even if this is in no way a strategy of the manufacturer, we can for example imagine in a certain context the representation of BMW Motorrad.”

Within the premium brands, BMW would thus follow the example of Mercedes-Benz and Audi. At the end of December 2021, the brand with the star concluded an agreement with the European network on this subject with the objective of selling 50% of vehicles under this distribution format by the end of 2023.

For the network, this was a surprise. Many are worried about the customer satisfaction that such a contract could have, having in mind the experience linked to the “i” range which, according to some, “had been very complicated”.

Others are very dubious about the first feedback they have had regarding the organization of this future sales model. “We are talking about five cars in a showroom, seven being tested, one of them thinks. When you have a range like BMW, you risk creating disappointment.” The question about the profitability of investments related to real estate also remains open.