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Windmills to Agency Model: Don Quixote Rides Again.


Windmills to Agency Model: Don Quixote Rides Again.

When we dive into the never-ending debates surrounding the infamous agency model, it brings to mind a story from the 17th century about Don Quixote.


Alonso Quixano, having consumed countless chivalric tales, lost his grip on reality and imagined himself a knight-errant. He renamed himself Don Quixote, donned some old armour, hopped on a rickety horse named Rocinante, and set off on adventures with his loyal squire, Sancho Panza.


Don Quixote's noble ideals often clashed with the harsh realities of the world, leading to amusing and tragic outcomes. Eventually, his escapades earned him both mockery and scorn from those he encountered but also respect and admiration for his unwavering belief in chivalry and his enduring friendship with Sancho.


In time, Don Quixote returned to his village, regained his sanity, and, on his deathbed, abandoned his whimsical ideals, seeking forgiveness.


Today's story offers a contemporary retelling of this tale, albeit with three distinct groups - the cunning villains, the unfortunate victims, and the uninterested bystanders.


For over 130 years, a business model thrived, satisfying all three involved parties. Until it didn't anymore.


The villains, the car makers, depleted their financial resources and sought ways to stay afloat. They aimed to change their fate and, in doing so, their relationship with the bystanders, the customers.


The customers, too, wanted to escape the experiences of Istanbul bazaars, moving towards the new world of omnichannel shopping, valuing the transparency, control, and convenience found elsewhere.


The victims, who previously held the keys to the customers and, by extension, the villains by their dangly bits, found themselves in a difficult situation.


While the villains pursued change, the bystanders remained unfazed. For them, the landscape remained largely the same. In fact, it promised a brighter future.


The victims, on the other hand, faced a drastically different reality. Some rallied together, using unions, media, and, in some cases, legal means.

Their campaign resembled the brave Don Quixote tilting at windmills, with uncertain chances of success.


Certainly, the villains compelled the victims to build grand glass castles, but ultimately, the villains and the bystanders paid for it. Also, given that this saga plays out in the capitalist era, not in a distant, utopian world, the villains are entirely justified in reevaluating their sales approach.


Most victims acknowledged the shift and turned toward securing their future relevance.


However, not all did. Some had already perished along the way, dragging their loyal comrades with them. Others persist in their struggle.


The resolution of their story remains uncertain. What's clear is the entrenched status of the Agency Model, with no sign of change on the horizon.


One might hope that these modern-day knights would follow Don Quixote's example and, at the end of their journey, change their stance and move forward.


The Happy Ending


So, how can these "traditional" dealerships adapt to the new world? I believe the answer is rather simple.


Dealerships possess three significant advantages over manufacturers and online marketplaces: their physical locations, their skilled personnel, and their multi-brand proposition covering new and used cars and different means of ownership, which I believe are the foundation of potential opportunities.


All consumers prefer choice. Most car buyers also value expert guidance when picking the right car - whether new or used - from the right brand, at the right price, with the right ownership method. Many still want a hands-on experience before they buy, and though their numbers are shrinking, it's mainly due to less-than-stellar past experiences. Massively improving customer experiences should rekindle their appeal.


Moreover, the need for services like car handovers, maintenance, tire replacements, and major and minor repairs remains.


These needs could open up new prospects and revenue streams. Imagine a scenario where cars are picked up for servicing in the evening, worked on overnight, and returned, cleaned, flawless, and polished by morning. The infrastructure costs are already covered, and the additional expenses for utilities and extra staff hardly dent the profits.


Online automotive part and tire vendors don't necessarily have to undercut dealerships either. Large dealer groups could easily outperform them in volume, while smaller or independent dealers could achieve similar purchasing power through dealer associations.


While the dealerships might have to adjust their markup and hourly rates, the increased volume should offset these reductions. In this new era, focusing on the customer lifecycle should turn these additional volumes into repeat business rather than one-time transactions.


This transition may require the development of new customer-centric experiences and digital strategies, as well as refining marketing expertise and digital solutions.


Individually, dealerships might lack the financial firepower of OEMs or large online retailers. However, if each brand's dealership contributes to a collective fund managed by the dealer association, their combined purchasing power would catapult them into the future.


Indeed, there may be numerous arguments challenging the feasibility of these ideas. They might have some validity, but they lead me to the most crucial shift required - a change in mindset.


The bygone era has faded, and the new dawn calls on dealerships to embrace creativity, agility, innovation, efficiency, and a customer-centric ethos, moving beyond a mere focus on products or services.


Will these traditional automotive pioneers adapt and thrive, or will they face obsolescence? The clock is ticking, and the verdict will soon become apparent.

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