Volvo rules out fixed-price agency sales in Australia – for now

Volvo Car Australia will not move to an agency-sales business model – at least not in the medium term, according to the Chinese-Swedish car-maker’s global chief Jim Rowan.

Speaking to media during a flying visit to Australia this month, the Scot was clear that Volvo would continue with its conventional wholesale and dealership structure for the foreseeable future in Australia, where Volvo will become an EV-only brand four years ahead of its parent company in 2026. 

Mercedes-Benz and Honda have shifted to an agency model in Australia.

Simply, this translates to fixed vehicle prices for customers and ownership of new-vehicle stock by manufacturers, who pay retailers a fixed agency fee to sell the vehicles.

In both cases agency sales have led to higher prices, smaller model ranges and reduced sales.

“There’s a synergy here,” Rowan commented. “We have over 2000 dealerships across the world and a relationship with those dealers. Some of our competitors – and certainly a lot of the electric start-ups – they don’t have that model.

“[But] when you sell so many cars onto the market – unless you want to set everything up yourself – you’re going to need to have a way in which you can... engage with those customers properly.

“We’ve got that. We want to keep that,” he stated.

“The only thing that changes [from conventional dealer models] is that we need to be part of the conversation and need to understand those customers and what drives those customers...

“And we can’t, and we shouldn’t have to rely on the dealership to be a conduit to those customers,” the Volvo chief stated.

Rowan confirmed Volvo would push forward with its agency model trials in the UK and Sweden and also spoke to Volvo’s strategic shareholding in UK cars-for-sale platform carwow.co.uk.

“We’ve been pretty public that we’re trying the [agency model in] UK and Sweden. We understand those markets... But what we want to do is learn.

“And we made an investment through a technology fund in a company called carwow in the UK. Why did we make that investment? Simply to understand how that works.

“By making that investment, it really helps us understand the nuances of how cars are sold online,” Rowan revealed.

“We never invented this. That [digital] train’s left the station – it’s been slow to come into the auto industry and now it’s arrived.

“So, you’ve got two choices. You can embrace it, you can understand it and you can use it to your best advantage. Or you can try and push it away and hope it’s not going to happen.

“I don’t think the latter choice is going to be that productive,” Rowan stated.

Ultimately, Rowan said the decision around how Volvo sells it cars will be made on a market-by-market basis.

“We’ll do the UK and we’ll do Sweden. We’ll take a beat, we’ll take a pulse, and then we’ll say: “OK, where else does it make sense? I don’t know that it makes sense here or whether the current model is the best model for us.

“It’s up to Steve [Connor, Volvo Car Australia boss] and the team here to make that decision,” Rowan stated.

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