The agency model in the car trade is fundamentally transforming the industry: manufacturers sell directly to end customers while dealers become intermediaries. What does this specifically mean for car dealerships, margins, and daily business operations? This comprehensive article provides all the facts, opportunities, and risks – and shows how you as a dealer can optimally prepare for the change.
What is the agency model in the car trade?
In the agency model (also known as the agent model), the dealer no longer concludes the purchase contract with the customer; instead, the manufacturer (OEM) sells directly. The car dealer becomes a commercial agent – brokering transactions, advising customers on-site, and handing over vehicles, but no longer concluding their own purchase contracts.
In brief: In the agency model, the manufacturer is the customer’s contractual partner. The dealer receives a commission (agency fee) instead of a trade margin from the vehicle sale. The vehicle passes directly from the manufacturer to the customer – the dealer never becomes the owner.
Distinction from the traditional dealer model
In the classic authorized dealer model, the dealer purchases vehicles from the manufacturer at their own risk and sells them with a markup to the end customer. They bear the full economic risk: holding times, depreciation, storage costs, and sales risk. In the agency model, this entrepreneurial risk is eliminated – but so is the freedom to set prices and the opportunity to achieve special margins through astute purchasing.
The agency model in the car trade is not an entirely new invention. In other industries – such as insurance or real estate – intermediaries have worked as commercial agents for decades. In automotive retail, however, it represents a paradigm shift, because the industry has been based on the proprietary dealer model for over 100 years.
Agency model vs. classic dealer model: comparison table
The following table provides a structured overview of the key differences between the existing authorized dealer model and the new agency model:
| Feature | Classic dealer model | Agency model |
|---|---|---|
| Customer’s contractual partner | Dealer | Manufacturer (OEM) |
| Pricing | Dealer sets the final price | Manufacturer sets the price |
| Vehicle inventory | Owned by the dealer | Owned by the manufacturer |
| Capital commitment | High (floor plan financing) | Low to none |
| Compensation | Trade margin (buy/sell) | Commission / agency fee |
| Discounts & rebates | Dealer decides | Manufacturer decides |
| Customer data | With the dealer | Primarily with the manufacturer |
| Entrepreneurial risk | With the dealer | With the manufacturer |
| Margin taxation | Applicable (Section 25a UStG) | Not applicable |
| Legal status | Proprietary dealer | Commercial agent (Section 84 HGB) |
Which brands are adopting the agency model?
The trend toward the agency model in the car trade has gained massive momentum in recent years. Several major manufacturers have already made the switch or made concrete announcements:
- Mercedes-Benz: Pioneer in Europe – introduced the agency model for new vehicles in several European markets since 2023. Mercedes was one of the first premium manufacturers to take the step. Dealers report a new dynamic in customer relationships but also challenges in converting internal processes.
- Stellantis: The group (Peugeot, Citroën, Opel, Fiat, Alfa Romeo, Jeep, etc.) is driving the transition to the agency model for its brands and planning a phased rollout in Europe. Given the multitude of brands in the group, this is a particularly complex undertaking.
- Volkswagen: VW has announced a medium-term shift to an agency-style model – initially for electric vehicles in the ID range, with a view to the entire lineup. Implementation is proceeding step by step and varies by market.
- BMW: Currently pursuing a hybrid approach and monitoring market developments, but has launched agency model pilots for specific model series and markets. BMW emphasizes the importance of the dealer partnership and is proceeding more cautiously than Mercedes.
- Toyota & Honda: Closely following the trend but sticking with the traditional model for now. Especially in the volume segment, Asian manufacturers continue to rely on proven structures.
Market forecast: Industry experts and management consultancies estimate that by 2030, around 40–50% of all new cars in Europe could be sold via an agency model. Some analysts predict up to 60%. For dealers, this means: preparation should begin now – those who react too late risk falling behind.
Legal framework: commercial agent per Section 84 HGB
In the agency model, the car dealer legally becomes a commercial agent within the meaning of Section 84 HGB. This has far-reaching consequences for contractual design, compensation, and dealer protection.
What does commercial agent status mean?
A commercial agent is, by law, an independent businessperson tasked with brokering or concluding transactions in the name of another entrepreneur. In the automotive context, this means:
- The dealer acts in the name and on behalf of the manufacturer.
- There is a statutory right to commission for every brokered transaction (Section 87 HGB).
- Upon contract termination, a goodwill indemnity per Section 89b HGB may arise – important financial protection for dealers that can amount to up to one year’s commission.
- The dealer has a duty of loyalty to the manufacturer; the manufacturer has a duty of care toward the dealer.
- Statutory minimum notice periods apply, increasing with the duration of the contractual relationship.
EU Block Exemption Regulation and competition law
The new EU Vertical Block Exemption Regulation (VBER), in effect since June 2022, contains for the first time specific provisions for genuine agency agreements in automotive distribution. The competition law framework clearly distinguishes between genuine and non-genuine agencies:
In a genuine agency, the manufacturer assumes the essential economic risks. In this case, the competition law restrictions of the VBER do not apply – the manufacturer may impose binding prices on the agent. In the classic dealer model, this is prohibited under competition law (resale price maintenance).
Impact on dealer margins and commissions
One of the most sensitive points in the transition to the agency model is the change in the earnings situation for car dealers. The economic impacts are complex and depend on many factors.
From margin to commission
In the classic model, dealers typically achieve gross margins of 8–12% on new vehicles, of which only 1–3% net margin often remains after deducting all costs (personnel, rent, marketing, floor plan financing interest). In the agency model, dealers receive a fixed commission per brokered vehicle, which varies by manufacturer and model.
- Commission levels: Industry reports cite agent fees between 4 and 7% of the net selling price – depending on the manufacturer, vehicle segment, and negotiation outcome.
- End of discount wars: Since the manufacturer sets the price, the margin pressure from aggressive price competition among dealers is eliminated. Customers can no longer play dealers against each other.
- Predictable income: The commission is calculable with certainty – significantly easing financial planning and liquidity management.
- Additional compensation: Many manufacturers offer additional bonuses for test drives, customer satisfaction, service, or achieving certain sales targets.
For commission calculation and management, dealers in the agency model need suitable digital tools that transparently and in real time map and document all compensation entitlements.
Overall assessment: profit or loss?
Whether a dealer is better or worse off under the agency model depends on several factors: commission level, elimination of capital commitment costs, reduced operating expenses (less floor space, lower financing costs), changed personnel costs, and development of the service business. A blanket statement is not possible – individual calculation is decisive. Dealers should prepare a detailed profitability analysis before agreeing to an agency contract.
Impact on margin taxation
A frequently overlooked but economically critical point for many dealers: margin taxation per Section 25a UStG is fundamentally not applicable in the agency model.
What does this mean in practice?
- In the classic model, dealers could pay VAT on used car sales to private customers only on the margin (difference between purchase and selling price) – a significant tax advantage that made used cars considerably cheaper for private buyers.
- In the agency model, the manufacturer sells; there is no dealer margin in the tax law sense. The full selling price is subject to standard VAT.
- Dealers who still trade their own used cars in parallel can of course continue to use margin taxation for that independent business.
- For pure agency transactions, this tax advantage is completely eliminated – a point that should be considered in contract negotiations with the manufacturer.
Practical tip: When switching to the agency model, review with your tax advisor how the transition affects your used car business. Many dealers will operate a hybrid model – agency for new cars, proprietary trading with margin taxation for used cars. This separation must be cleanly documented in the accounting.
Inventory changes: who owns the vehicles?
In the agency model, ownership of the vehicles remains with the manufacturer – until sale to the end customer. For dealers, this has far-reaching consequences regarding balance sheet, financing, and daily organization.
Benefits in inventory financing
- No storage costs: Capital commitment through vehicle inventory is largely eliminated. Interest on purchase financing and floor plan costs are drastically reduced.
- No depreciation risk: Holding times and depreciation no longer burden the dealer. Model changes and demand fluctuations are no longer a financial risk.
- Free liquidity: Capital previously tied up in inventory is available for other investments – such as workshop equipment, digital infrastructure, or staff training.
- Balance sheet reduction: Since inventory is no longer reported on the balance sheet, key figures such as the equity ratio improve – which in turn can positively affect creditworthiness.
Challenges in vehicle management
Even though the vehicles belong to the manufacturer, they are physically at the dealer’s premises. Clean vehicle management therefore remains essential – both for internal organization and for settlement with the manufacturer. The dealer must be able to demonstrate at any time which vehicles are on the premises, which are being used for test drives, which are available for sale, and which have already been handed over to customers. Documentation obligations are actually stricter in the agency model, as the dealer works with someone else’s property.
The changing customer relationship
One of the biggest concerns of many dealers regarding the agency model is the customer relationship. When the manufacturer becomes the contractual partner – does the customer still remain “mine”? This question is intensely discussed in the industry.
What changes
- Customer data: In the agency model, primary customer data (name, address, purchase contract, payment information) goes to the manufacturer. The dealer often has only limited access to this data.
- Online configuration: Customers can configure and order vehicles directly from the manufacturer online – even without a prior dealer visit. The digital channel is gaining importance.
- Touchpoints: The number of direct customer contacts may decrease as orders, financing, and contract conclusions are processed digitally.
- Marketing: The manufacturer is increasingly taking over customer outreach through its own digital channels. The dealer’s local advertising loses some control.
What stays the same – and where opportunities lie
- In-person advice: Personal consultation, test drives, and vehicle handover remain the dealer’s domain. Especially for high-end vehicles, customers want a personal experience.
- Service business: Maintenance, repairs, general inspections, and accessories continue to run through the dealership – a stable revenue pillar.
- Local presence: Customers value a trusted contact person on-site – this advantage persists and can even be strengthened.
- CRM as key: Those who use a strong CRM system can actively maintain the customer relationship even in the agency model and position themselves as the preferred local contact. Systematic management of contacts, follow-ups, and customer feedback becomes the decisive competitive advantage.
Advantages and disadvantages of the agency model for dealers
Advantages (Pro)
- Elimination of capital commitment in vehicle inventory
- No depreciation risk from holding times and model changes
- Predictable and transparent commission income
- End of margin-destroying discount wars among dealers
- Uniform pricing strengthens brand image and customer satisfaction
- Manufacturer assumes marketing and sales costs (partially)
- Statutory goodwill indemnity at contract end (Section 89b HGB)
- Improvement of balance sheet ratios through balance sheet reduction
Disadvantages (Con)
- Loss of pricing freedom and entrepreneurial autonomy
- Potentially lower earnings per individual transaction
- Increasing dependence on the manufacturer for strategic decisions
- Customer data goes primarily to the OEM
- Margin taxation does not apply in agency business
- Less entrepreneurial freedom for sales promotions and local advertising
- Transition costs for IT systems, processes, and contracts
- Risk that commissions may be reduced retroactively
How to prepare as a dealer for the agency model
The switch to the agency model requires strategic preparation on multiple levels. These steps will position you well:
1. Analyze your business model
Prepare an honest and detailed assessment: what is your current margin per vehicle? Which costs are eliminated in the agency model, which new ones arise? Calculate various commission scenarios and examine the impact on your overall revenue. Also consider secondary effects such as the elimination of inventory financing and the changed tax situation.
2. Seek legal advice
Have your agency contract reviewed by a lawyer specializing in distribution law. Pay particular attention to: commission level and structure, territorial protection, term and duration, notice periods, goodwill indemnity claims, and the distribution of costs and risks. Those looking to establish or restructure their own business will find further guidance on legal form and business planning in our guide on opening a car dealership.
3. Build digital infrastructure
In the agency model, digital processes become even more important: seamless connection to manufacturer systems, transparent commission statements, comprehensive vehicle management, and a capable CRM system. Invest early in the right software to avoid bottlenecks during the transition.
4. Train and engage your team
Your employees must understand, accept, and actively support the change. Train salespeople in their new advisory role, in digital tools, and in the changed legal framework. Communicate transparently about upcoming changes and the opportunities they bring. A motivated team is the most important success factor in any transformation.
5. Strengthen and diversify the service business
The service business becomes even more important as a revenue source in the agency model. Invest in workshop utilization, expand your accessories offering, develop after-sales support, and explore additional services such as insurance brokerage, leasing consulting, or mobility solutions. The more broadly you are positioned, the more independent you are from any single revenue source.
How AutoPult supports both models
Whether classic dealer model, agency model, or a hybrid model – AutoPult was developed to optimally support car dealers in every distribution constellation:
- Vehicle management: Manage your own inventory and manufacturer vehicles in one system. Clear separation of proprietary stock and agency vehicles with different workflows, documentation requirements, and billing logic.
- Commission calculation: Transparent mapping of agency commissions, bonuses, and compensation models – in real time and automated. Every employee can see their compensation at a glance.
- CRM: Keep the customer relationship under control – with complete contact history, task management, follow-up automation, and interfaces to manufacturer systems.
- Margin taxation: For your proprietary used car business, margin taxation remains relevant – AutoPult calculates and documents everything in compliance with Section 25a UStG.
- Hybrid workflows: Many dealers will operate both models in parallel. AutoPult cleanly maps this complexity and ensures clear separation in accounting, reporting, and daily workflows.
Future-proof: AutoPult is continuously adapted to industry requirements. New manufacturer integrations and agency model features are continuously added – so you are equipped for any market change.
Common questions about the agency model in the car trade
What is the agency model in the car trade?
The agency model means that the manufacturer (OEM) sells vehicles directly to end customers. The dealer becomes a commercial agent per Section 84 HGB and receives a commission for brokering, advising, and vehicle handover – instead of a classic trade margin from proprietary business.
Which car manufacturers already use the agency model?
Mercedes-Benz introduced the agency model in Europe as one of the first major manufacturers for new vehicles. Stellantis and Volkswagen have announced the switch or are driving it forward. Other brands like BMW are running pilot projects in selected markets.
Is margin taxation possible in the agency model?
No. Margin taxation per Section 25a UStG requires the dealer to purchase the vehicle themselves and resell it on their own invoice. In the agency model, the dealer is only an intermediary and never becomes the owner – margin taxation is completely eliminated for these transactions.
How high is the commission in the agency model?
Commission levels vary by manufacturer, vehicle segment, and individual negotiation. Industry reports cite values between 4 and 7% of the net selling price, sometimes supplemented by performance-based bonuses for customer satisfaction or sales targets.
Will I lose my customers as a dealer?
Not necessarily. While primary customer data goes to the manufacturer, personal consultation, test drives, vehicle handover, and the entire service business remain with the dealer. With a good CRM system, you can actively maintain the customer relationship and position yourself as the local point of contact.
What happens to my vehicle inventory?
In the agency model, new vehicles belong to the manufacturer until they are sold to the end customer. Capital commitment and depreciation risk are eliminated for the dealer – but so is pricing freedom. Nothing changes for your own used car business.
Do I have a goodwill indemnity claim at contract end?
Yes. As a commercial agent per Section 84 HGB, you are entitled, under certain conditions, to a goodwill indemnity per Section 89b HGB at contract termination, which can amount to up to one year’s commission. Be sure to have your contract reviewed by a specialized attorney.
Conclusion: embrace the agency model as an opportunity
The agency model in the car trade is not a short-term trend – it is a structural transformation of the entire industry. For dealers, this means: less risk but also less entrepreneurial freedom. Less capital commitment but also new dependencies. Margin taxation is eliminated for agency business, but income predictability increases significantly.
What matters is that you prepare now and proactively: analyze your business model, understand the legal foundations, build digital processes, and bring your team along. Those who actively shape the agency model and leverage its opportunities, rather than merely enduring it, will succeed in the new distribution landscape.
AutoPult supports you in this – with software that seamlessly covers both the classic dealer model and the agency model. This keeps you flexible, efficient, and future-proof, regardless of how the market evolves.
