Automotive Agency Model

1. Definition and Core Characteristics

The automotive agency model is a retail channel structure positioned between the traditional authorised dealership model and the brand direct-sales model. Its defining features are: the OEM mandates uniform retail pricing, controls vehicle inventory, and issues customer invoices directly, while dealerships transition into agents responsible for showroom display, customer engagement, test drives, vehicle handovers, and aftersales services. These agents earn service-based commissions pegged to performance and volume rather than profiting from vehicle price markups. Buyers place orders via the brand's official mobile app or mini-programme, with payments remitted directly into the manufacturer’s account.

In essence, the agency model resolves two major pain points of the conventional 4S dealership model: a lack of price transparency (where on-the-road transacted prices are dictated by individual dealers) and stock holding risk (where dealers bear the financial burden of holding floor-plan stock). For car buyers, it eliminates the hassle of "having to haggle and shop around across different showrooms of the same brand".

2. Core Comparison with Traditional Authorised Model

3. Major Practices and Industry Progress

The agency model has been adopted and piloted by several mainstream carmakers. SAIC Volkswagen began trialling the agency model with the rollout of its ID. series in 2021, investing RM500,000,000 to establish its ID.HUB middle-office platform, successfully raising channel data completeness from 62% to over 95% through a five-year dedicated push. In 2025, ZEEKR announced the introduction of an agency tier alongside its direct-sales network to expand reach into lower-tier regional markets, ensuring partner outlets maintain uniform retail pricing, service benchmarks, and customer experience on par with direct-operated stores. In addition, marques such as BMW, Porsche, FAW Audi, and Volvo have also initiated agency model pilot programmes, collectively accounting for over 30% of market share.

4. Transition Resistance and Controversies

Implementing the agency model in the Chinese automotive market faces pushback from both ends of the channel. From the dealers' standpoint, squeezed commission margins remain the core grievance—dealers note that commission payouts are disproportionate to their operational responsibilities and risk exposure, making it difficult to recoup heavy showroom capital expenditure and facility overheads. Following the transition, dealership annual revenue turnover dropped sharply from the RM100,000,000 mark, adversely affecting corporate valuations and local tax arrangements. From the carmakers' standpoint, traditional dealers have long served as vital "inventory shock absorbers", reducing the OEMs' immediate appetite for proactive channel reform.

A more critical friction point lies in "incomplete transition"—certain carmakers adopt the agency model in name only, while in practice still requiring dealers to handle customer invoicing and shoulder vehicle floor-plan stock. This "agency model in appearance, dealership model in reality" significantly compromises the intended efficacy of the reform.

5. Development Trends

Overseas markets have spearheaded channel transformation, with European carmakers progressively switching from conventional authorised franchise models to the agency model. In the Chinese market, the traditional authorised distribution model remains dominant (accounting for roughly 50%), the agency model makes up around one-third, and the asset-heavy direct-sales model stands at under 20%.

The competitive focus of automotive retail networks has now shifted from pure showroom footprint scale to data asset quality. The ultimate success of the agency model hinges on whether customer and operational data can be migrated seamlessly and accurately from showroom floors to the OEM—a key operational threshold currently faced by marques such as SAIC Volkswagen, XPENG, and Xiaomi in their agency implementations.