McLaren pivots to customer order-based allocations for stores

McLaren Automotive is shifting to a customer order-based dealer allocation model in North America.

Under the new system, introduced in the fourth quarter, McLaren's 29 stores in the U.S. and Canada will primarily receive customer-ordered vehicles instead of a predetermined number of stock models.

"We are placing an emphasis on getting the right balance of demand and supply," McLaren Americas sales boss Geoff Tink told Automotive News. "We will allocate inventory to those dealers that show demand in the form of customer orders and effectively provide our allocation to the places where it's needed the most."

The new distribution strategy is a sign of a maturing business.

When McLaren expanded to North America a dozen years ago, Tink said, there was "an element of finding our feet."

The executive said the British brand initially allocated vehicles to dealers based on a "perception of demand" based on market research.

"Sometimes that was accurate, and sometimes it wasn't," Tink said. "We freely admit that we may have made some mistakes early on."

McLaren's pivot to an order bank-focused supply model occurs as the brand sees a surge in demand for bespoke vehicles. Up to 80 percent of new-car sales in the U.S. are custom orders — more than double what it was pre-pandemic.

McLaren's latest facility upgrade program for dealerships reflects the trend. Commissioning areas, where customers can go through options to spec out a vehicle, are a focal point of the new design. Some stores have a "Woking Window," a video feed of the McLaren Production Center in Woking, England.

McLaren said the new allocation system creates flexibility, drives retailer profitability and rewards good customer experience.

"We [can] more closely prioritize sending new inventory to our top-performing dealers," Tink said. "But we can also adjust to economic and geographical factors as they evolve over the course of the year."

McLaren will let retailers order stock on popular models, such as the Artura and GT, to account for walk-in business — a phenomenon relatively unique to the Americas.

Customer order-based supply means retailers are less likely to get stuck with unsold vehicles — an expensive proposition in today's high-interest rate climate.

Retailer Kevin Flanagan said the new allocation system matches supply to customer demand better.

"It gets the cars where they need to go and keeps dealers from hoarding and then discounting," said Flanagan, partner at McLaren North Jersey in Ramsey, N.J.

Selling vehicles at full margin raises the brand's value, said Robert DiStanislao, president of RDS Automotive, which operates two McLaren stores near Philadelphia and Newport Beach, Calif.

Customer order-based allocations also make sense for a boutique automaker with limited production.

"A dealer in Nebraska shouldn't get a stock car when the dealer in Philadelphia has a line of three customers that want them," DiStanislao said.

At a retailer meeting this spring, McLaren execs projected global sales of 4,000 this year and a modest 10 percent increase next year. North America accounts for about 40 percent of the brand's global sales.

Tink sees the demand-based new-vehicle allocation system as also benefiting the used-vehicle side of the business.

"Dealers have a certain number of vehicles that they're able to manage and sell at any one time — they themselves are resource-constrained," Tink said. "If they're holding excess new-car inventory, it diminishes their ability to sell certified pre-owned" stock.

Tying dealer supply to the order bank also rewards customer service.

"For a consumer to commit to ordering a vehicle, there needs to be a robust customer experience," Tink said. "By us creating a system whereby allocation goes to the dealers with the strongest order bank, it will incentivize dealers to really look after the customer."