The COTY case: how recent legal judgements may impact on the development of online channels

Andrew Tongue

Publication Number: Executive Briefing 04/18

Author: Andrew Tongue

Date: April 16, 2018

Tags: New vehicles, Automotive regulation, Dealers, Customer insight

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There is much discussion in the automotive sector at the moment about online channels, and their role within the customer’s car buying process, up to and including the final transaction.  This Briefing focused on this final stage in the buying journey, rather than the information-gathering and lead-generation stages that happen beforehand.

Online transactions can be handled in a number of different ways; OEMs can operate their own direct-selling web sites, or they could sell via 3rd party platforms such as Amazon (examples of this include Fiat in Italy and now Opel in Germany), eBay, or Alibaba’s Tmall platform in China.  OEMs do this entirely on their own terms, and are in full control of the customer offer.  But equally, their dealers can do the same, either via their own channels, or via the 3rd parties (such as the example of German Renault dealer Autohaus König with its Amazon store).

Across a wide range of retail sectors, this final option, distributors or retailers selling via 3rd party platforms, has proved problematical for the producers or ‘brand owners’ in particular, because it is often outside the scope of their contractual control of their network, or in other words, ‘beyond the franchise’.  For instance, how can they be sure that the platform will ‘display’ the product in a manner consistent with its desired brand image, or that it won’t undermine the price positioning of the product at physical outlets by discounting it alongside competitors?  How to ensure that the distributor will be able to provide customers with the appropriate level of after-sales support if they buy via a remote 3rd party platform, with little if any direct contact with the brand’s appointed retailer?  These questions are all increasingly relevant for the automotive sector too, as players look to exploit the potential that digital technologies offer, and as the 3rd party platforms grow in influence.

Please follow the link on the right to download the full briefing.