We have argued persistently that a more integrated downstream, between the NSC and Dealers, not only makes sense, but will be necessary to take out significant cost and achieve more impact. The heavy setbacks witnessed in the introduction of the agency model highlight the complexity for OEMs to fully take over dealer roles. It is becoming increasingly clear that successfully implementing an agency model requires a common playbook with dealers-to-be-agents, to avoid interrupting customer impact and local efficiency. This involves shifting the operating model towards seamless integration of existing systems and end-to-end processes, while ensuring effective data-sharing between OEMs and dealers. Which increases distribution capabilities / efficiency, but also simply "replaces" the dealer in the host of local tasks he accomplishes. Central pricing had been one of the drivers for considering agency models, avoiding inter-dealer cannibalization. It can however also lead to massive losses in price-sensitive periods, or by not respecting structural differences in preparedness-to-pay across regions. Our interpretation of events in a nutshell: If a functioning agent model is optimal, a streamlined dealer model is superior to a dysfunctional agent model.
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