[Correction: The following story was published previously and reported Volkswagen’s online sales model would apply to all Volkswagen dealers worldwide. Although that’s what the title of the company press release stated, in fact the online sales model will only apply to sales in Germany. We regret our error. A corrected version of the story appears below.]
Volkswagen says all of its dealers in Germany have agreed to an online sales model for its ID. branded electric cars. The agreement means dealers will act as agents of the company with Volkswagen responsible for sales, marketing, and financing.
Image courtesy of Volkswagen
According to a press release dated May 20, Volkswagen says going forward its dealers in Germany will “assume the role of agent for selling cars to private customers and small commercial enterprises. They will look after acquisition, sales consultation, organizing test drives, transaction processing, and vehicle handover in coordination with Volkswagen.”
“The preferred dealer chosen by the customer at the beginning of the sales process receives the same commission and bonus as in-showroom business, even if the vehicle is purchased online direct from Volkswagen. Volkswagen decides on the vehicle price, thus dispensing with complicated price negotiations. Dealers can therefore count on calculable compensation regardless of whether the customer buys their vehicle online or in the showroom.”
Volkswagen will assume responsibility “for vehicle financing and bears the returns and residual value risk.” Holger Santel, Head of Sales and Marketing Germany, explains. “The dealer no longer has to finance vehicles in advance. We also bear inventory cost and the costs associated with showroom vehicles. We are offering dealers an extremely attractive leasing concept for demonstration vehicles.”
The company claims customers want a blended sales experience, one that allows them to visit a local dealer to learn more about cars they may be interested in and then order one online. So-called “touchless” delivery procedures are also enhanced by this model. “Subject to the customer’s consent, available data on the customer and their vehicle is used to communicate with them individually and consistently,” the company says. Thunder, its new IT platform, is under development at the moment and will debut at dealers concurrent with the launch of the ID. cars. Only ten clicks will be needed to configure an entire car.
Dirk Weddigen von Knapp, who chairs the Volkswagen and Audi partner association, says, “The agency model brings significant financial relief for dealers, and that is particularly important at the present time. Our partners can therefore focus on what makes retail so indispensable — personal, competent customer care. I am delighted that all partners have signed the jointly drafted agreement. That is confirmation of the great trust in the agency model and our association.”
Implications Beyond Germany
The franchise dealer model that is pervasive in the United States is rarely used in other countries. It is possible this change in how to do business could have an impact on the US franchise dealer model at some point in the future. Give Volkswagen credit for rethinking its relationship with its dealers as it transitions to selling electric cars.
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