Customer Intimacy and the Rise (and Retrenchment) of the Agency Model
Written by Jason Craker on
OEMs at the Crossroads: Reflections 18 Months On
The trouble with predicting the future is that it never stays still. When we first wrote about the seismic changes facing the automotive industry, the world was still grappling with the aftermath of a global pandemic, and innovation seemed poised to transform every corner of the sector. Now, 18 months on, it’s time to revisit those reflections.
In many ways, the landscape has evolved dramatically. The technology underpinning vehicles has leapt forward at a staggering pace—electric cars that once boasted a range of 300 miles now routinely achieve 550, and fast-charging capabilities have shifted from hours to mere minutes. Yet this rapid progress has not been mirrored in other areas of the industry. While vehicle R&D marches relentlessly onward, innovation in retail, customer engagement, and financial services seems to have stalled.
During this time, we’ve seen a wave of anxiety ripple through the sector. Mergers and acquisitions have reshaped the competitive landscape, profit margins have been squeezed, and some bold ventures have been quietly rejected. There’s been a notable reversion to type as companies pull back from the edge of innovation and focus on their core offerings.
But what does this mean for the customer? For changemaker, our focus has always been on the intersection of transformation and the human experience—the ways businesses connect with and serve their customers in a changing world. Despite the technological strides made, we see clear signs that the human side of the industry has struggled to keep pace.
In 2025, we thought it was time to revisit our OEMs at the Crossroads series. We’ll reflect on our predictions, revisit our assumptions, and explore how recent developments have shaped the industry’s trajectory. The changes we’ve seen underline a fundamental truth: the path forward is rarely a straight line, and the waves of change can be as disruptive as they are transformative.
OEMs at the Crossroads Revisited, Part 1: Customer Intimacy and the Rise (and Retrenchment) of the Agency Model
More-than Eighteen months ago, I stood on stage at the Vehicle Electronics and Connected Services (VECS) conference in Gothenburg, delivering a keynote that explored the seismic shifts shaping the automotive industry. At the time, I was convinced that customer intimacy and the transition to the agency model were foundational changes the industry had to embrace to remain relevant. A year and a half later, those insights remain just as valid—perhaps even more so—but the road to transformation has been far rockier than anticipated.
When I wrote the original blog, I highlighted how political, economic, and environmental forces were propelling change. Those forces are still at work, but recent developments have complicated the picture. OEMs are under growing pressure to address shrinking volumes in key markets, driven by shifting consumer behaviours, economic uncertainty, and even a decline in the traditional two-car household. These changes have intensified the tension between the long-term promise of the agency model and the short-term survival instincts that push companies back to familiar ways of working.
The Tail Wagging the Dog
At its heart, the agency model aims to create a closer relationship between OEMs and their customers, enabling richer insights, greater loyalty, and more opportunities for value exchange. It represents a departure from the traditional dealer model, where manufacturers produce vehicles en masse, sell them to dealerships, and leave the retail side of the business largely in someone else’s hands. In theory, the agency model shifts the focus from pushing inventory through the supply chain to pulling customers into a more personalised, data-driven relationship.
Why should automotive manufacturers move to an agency model?
In practice, however, the implementation of the agency model has faced significant headwinds. Some major OEMs that had embraced this approach have since begun rolling it back in certain markets. The reason? Volume. Factories are still producing vehicles at rates that reflect past levels of demand, but with market conditions softening—particularly in Europe—the result has been an excess of inventory that OEMs cannot afford to keep on their books. This pressure has driven many back to the traditional wholesale model, where the responsibility for selling vehicles falls squarely on the dealership.
It’s a classic case of the tail wagging the dog. Faced with mounting investor expectations, revenue pressures, and the familiar rhythms of established processes, OEMs have reverted to type. The agency model, still in its infancy, has largely been shelved before it had a chance to fully embed and prove its potential.
The Cost of Playing It Safe
It’s natural to seek safety in uncertain times, but retreating to familiar territory carries risks of its own. The agency model wasn’t perfect—it required significant organisational change, new technologies, and a rethink of traditional roles—but it represented a step toward a more sustainable future. By pulling back now, OEMs risk prioritising short-term stability over long-term evolution.
Customer intimacy—the very thing the agency model sought to foster—has never been more important. With new entrants disrupting the market and volumes shrinking, OEMs must fight harder than ever for customer loyalty. Building those long-term relationships requires moving closer to customers, leveraging data to understand their needs, and creating tailored experiences that set brands apart from the competition.
Why is customer intimacy important for the automotive industry?
We’ve seen examples of this in other retail sectors. Brands like Nike have successfully transitioned to direct-to-consumer models, using data to strengthen customer relationships and eliminate middlemen. While the automotive sector’s complexities make it an entirely different beast, the underlying principle is the same: success depends on knowing your customers and meeting them where they are.
A Missed Opportunity, or a Stepping Stone?
The question isn’t whether OEMs should move closer to their customers—it’s how they do it. The last 18 months have shown that the agency model isn’t a silver bullet, but it’s also far from a failure. It’s a foundation to build upon, not a mistake to abandon.
To succeed, OEMs need to adopt a mindset of learning and adaptation. That means recognising that the first iteration of the agency model wasn’t perfect, but its underlying principles—data-driven insights, customer intimacy, and personalised value exchanges—are essential for the future. Reverting to traditional models may feel safe in the short term, but it risks leaving OEMs unprepared for the long-term challenges of a rapidly changing market.
The automotive industry has always been driven by innovation, and it must apply that same ethos to its business models. The road ahead may be uncertain, but the rewards of navigating it successfully are undeniable.
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