A significant shift is occurring in the UK new car sales landscape as manufacturers embrace the agency model.

Mercedes-Benz led the way in January, and other automakers are expected to follow suit. Although early feedback from dealers transitioning to the agency model is mixed, there is a growing concern about reduced negotiating power and potential sales closures.

To offset these risks, dealerships are considering diversifying revenue streams, with many venturing into the used car market.

However, this transition poses challenges, particularly for dealers who previously sold only one brand.

Expanding into used car sales requires a broader brand expertise to cater to customers' diverse preferences.

Dealers must swiftly adapt to understand the pricing and selling points of different brands. Acquiring stock and managing the supply chain also become vital aspects, as traditional sources like part-exchanges may not suffice.

Additionally, the used car sector faces intense competition and ongoing stock shortages.

To succeed, dealerships must build trust and establish a reputation for quality.

Partnering with recognised national brands can enhance credibility and provide access to independent vehicle inspections, warranties, and breakdown cover.

Dealerships must also expand their product range to include warranties for used cars.

Furthermore, customer retention becomes crucial, and offering vehicle servicing for used cars can help maintain long-term relationships and generate revenue.

While the agency model may not be universally favoured, dealerships willing to embrace new ventures can find opportunities for growth and expansion.

By carefully considering stock acquisition strategies, building knowledgeable teams, and establishing partnerships with reputable organizations like the AA, dealerships can navigate the transition from the franchise model and thrive in the evolving automotive industry.