Manufacturer Relationships in 2025: Navigating the New Landscape

A Relationship Under Pressure

The relationship between automotive manufacturers and their franchise dealer networks has always been asymmetric. OEMs set the terms; dealers operate within them. But the degree of asymmetry is increasing - and the pace of change is accelerating in ways that many dealer groups have not fully absorbed.

Electrification is the proximate cause, but it is not the only one. The shift to agency and direct sales models, the growth of manufacturer-owned digital retail channels, the increasing complexity of franchise standards and the capital requirements of EV infrastructure investment are all reshaping the commercial relationship between OEMs and their networks simultaneously.

The Agency Model: What It Actually Means

The move to agency - in which the dealer acts as an agent of the manufacturer rather than an independent retailer - is the most significant structural change to the franchise model in a generation. Under agency, the manufacturer sets the retail price, owns the customer relationship and pays the dealer a fixed fee per transaction.

For dealers, the implications are significant. Margin compression is the obvious concern, but it is not the only one. Under agency, the dealer's ability to differentiate on price is eliminated. The competitive advantage shifts entirely to customer experience, service quality and operational efficiency. Dealers who have competed primarily on price - and many have - face an existential challenge.

The manufacturers implementing agency models are not doing so to improve dealer profitability. They are doing so to control the customer relationship, capture data and protect margin in a market where their own cost structures are under pressure from electrification investment. Understanding this is the starting point for any effective dealer response.

Protecting Your Franchise Position

The dealer groups that will navigate this transition most effectively are those that have invested in the relationship with their manufacturer partners - not just commercially, but operationally. OEMs allocate their best franchise opportunities, their most favourable terms and their support during difficult periods to the dealer groups they trust and respect.

That trust is built through consistent performance against franchise standards, proactive communication, investment in facilities and training, and - critically - the quality of the relationship between dealer group leadership and the manufacturer's regional and national teams. This is relationship management in the most literal sense, and it requires dedicated attention.

Dealer groups that treat their manufacturer relationship as a purely commercial arrangement - to be managed at arm's length and engaged with only when necessary - consistently underperform those that invest in it as a strategic asset.

The Electrification Transition

The franchise model is being reshaped by electrification in ways that go beyond the agency debate. EV aftersales revenue is structurally lower than ICE aftersales - fewer moving parts, longer service intervals, no oil changes. For dealer groups whose profitability is heavily dependent on aftersales, this is a material threat that requires active planning, not passive observation.

The dealer groups that will emerge from the electrification transition in the strongest position are those that are already diversifying their aftersales revenue streams, investing in EV-specific technician training and positioning themselves as the preferred service partner for the growing EV parc in their markets.

This requires capital, planning and - in many cases - a frank conversation with the manufacturer about what support is available for the transition. Those conversations are best had from a position of strength, by dealer groups with strong franchise relationships and a credible operational track record.