Polestar does U-turn on fixed prices in Australia, now planning a dealer expansion

The Chinese-owned electric offshoot of Volvo – Polestar – is poised to ditch fixed prices in Australia and switch to the traditional dealer sales model as it plans its next phase of expansion locally.

The news was revealed by Carsales.com.au earlier this week, but the company has since confirmed a review into its Australian operations has been underway since late last year.

The change may not happen for several months but, in the meantime, customers can still order vehicles online.

The introduction of fixed prices by a number of car-makers in Australia in recent years has proven to be a risky move for some brands.

After Mercedes-Benz and Honda made the switch, their sales hit reverse locally.

Executives for both car-makers have previously said they want to sell fewer cars while making more profit – and insist the traditional dealer sales model is not financially viable for them.

However, since the introduction of the fixed-price business model (also known as the “agency” model, because the dealers are simply selling agents who do not own the showroom stock), the price of new motor vehicles has increased – in many cases by more than other brands over the same period.

After its first two years in the Australian market, Polestar electric cars are now poised to switch to the traditional dealer model as it plans to expand its presence in Australia following a global review.

Industry analysts say this move is a sign Polestar is serious about staying in Australia, and speculated Polestar doesn’t have the capital required to invest in the next stage of its local expansion – without the support of car dealers.

Appointing a national dealer network will give Polestar a larger showroom and servicing network across Australia, as well as a boost to sales.

And it means, in future, customers will be able to negotiate a deal.

For example, in the past fortnight alone, at least three brands (Peugeot $25,000 off, Nissan $18,000 off and BYD $8000 off) announced massive discounts on their electric cars – in some cases selling showroom stock at a loss – to make way for new inventory, and to compete with new rivals from China.

“It’s encouraging to see brands like Polestar recognising that the key to growing sales in Australia is by having a strong dealer network,” said the CEO of the Australian Automotive Dealer Association, James Voortman.

“While selling new vehicles directly online seems good on the surface, it is a lot harder than car companies realise. This decision (to appoint a national network of dealers) will in the long term likely benefit the Polestar brand and its customers.”

Mr Voortman said Polestar’s proposed U turn on fixed prices – and moving to negotiable prices – is part of “a wider trend among other car makers who have been considering (the fixed price sales model) but are now starting to walk away from it.”

“They are realising the benefit dealers bring to the automotive retail process.”

A media statement from Polestar said:

“We are in the initial stages of an operational review as the business prepares for the introduction of Polestar 3 and Polestar 4 later this year.

“This includes evaluating our (showroom) footprint in Australia and in other markets to ensure our brand is accessible to customers … and can meet the demand of two all-new SUVs.”

While dealer sources say the switch to the traditional showroom model in Australia is well progressed, Polestar says “it is too early to speculate” on what the business will look like after this review.

“We want to ensure that we achieve a model that benefits both our customers and our partners,” the media statement from Polestar said.

“One of the key drivers is increasing the number of customer touch points and retail locations.”

Polestar said it is committed to Australia in the long term and noted it is already “one of the top three markets globally for Polestar 4 pre-orders”.

The company also noted sales increases here last year for the Polestar 2.

In the meantime, customers can still order a Polestar online as per usual and have their vehicles serviced at one of 13 Volvo service centres nationally. 

As this article was published, Polestar had one showroom each in Brisbane, Sydney and Melbourne (plus a shopfront at the Chadstone shopping centre) – and one dealer each in Perth and Hobart.