What the agency retail model could mean for Lotus and its customers

Car brands such as VW, Alfa Romeo, Cupra, Mercedes and now Lotus are planning a shift to a so-called agency model of retailing where you buy the car from the brand, with the dealer now reduced to their ‘agent’. Lotus’s currently skimpy model line-up has helped it push through what is a fairly radical change starting with sales of the new Emira sports car and continuing with the electric SUV coming late this year. So what does it mean for Lotus customers? A move away from the traditional wholesale business model, where the car maker sells cars to the dealer, gives manufacturers such as Lotus a whole lot more control over the process. For one thing, that allows it to pitch an ‘omnichannel’ mix of online and showroom sales where the buyer can choose how they would like to buy. The price stays the same either way: that’s now set by Lotus and no amount of haggling will change that (in theory anyway). For Autocar Business webinars and podcasts, visit Autocar Business Insight For the online bit to work you need a slick platform, and Lotus reckons it has that in the newly revealed Lotus Drive ‘e-commerce’ platform. This is a configurator, sales checkout and online home for Lotus buyers and customers. “What we want to do is create a relationship structure with our customers on a direct basis,” said Lotus global head of sales Geoff Dowding at a recent presentation to UK dealers, where they got their first look at the brand’s new electric SUV, codenamed Type 132. Lotus has thinned out its UK dealer network to just 13 after terminating some contracts last year. With the remaining dealers now working as agents for Lotus and the online Lotus Drive sales platform available wherever there’s internet, the Geely-owned company can play a bit smarter. “It allows us to be more flexible on the retail structure,” said Dowding. For example, Lotus will open a flagship “immersive brand experience” in London, with smaller ‘Lotus centres’ offering the more traditional dealership services. Then it plans to build temporary pop-up showrooms at specific events. It follows the direct sales model of electric start-ups like Nio with its ‘Nio Houses’ and Xpeng’s ‘Experience Centres’. The standard is ultimately, of course, the Apple Store, that shiny welcoming showroom with friendly faces, no sales pressure and zero fears that their premium-priced products can be bought for cheaper elsewhere. There’s another angle, too. “It’s not just about selling new cars, it’s trade-ins too. They will control the second-hand car market for five years,” Nima Khandan Nia, owner of Lotus Silverstone, told Autocar. Newer cars traded in belong to Lotus, which means they can set the prices, theoretically giving them control of residual values. “Usually trade-ins will be another Lotus. Lotus will then distribute that car internally and control the price,” added Khandan Nia. “It’s a clever mechanism to control the brand for a good five or six years.” Lotus will be hoping that this strategy, combined with software updates for used cars that will give them the latest iterations of infotainment, battery management and driving assistance, will mean customers will be prepared to pay top money. If it works, that will cut the cost of finance for new cars.