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Volkswagen says 100% of its dealers worldwide have agreed to an online sales model for all its ID. branded electric cars. The agreement means dealers will act as agents of the company with Volkswagen responsible for sales, marketing, and financing.
According to a press release dated May 20, Volkswagen says going forward its dealers 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.”
What Do The Changes Mean?
So what does this change mean? For one, it could have significant impacts on local banks and taxing authorities. Many car buyers don’t realize that dealers pay manufacturers for cars as soon as they are delivered to the lot using something called “floor plan financing.” The lender earns interest on every car every day it remains unsold.Also, many taxing authorities assess property taxes on the value of a car for every day it is on a dealer’s lot. Volkswagen may elect to store its inventory of automobiles in jurisdictions that do not levy such property taxes, which could be a blow to cities and towns that rely on those taxes to balance their budgets. Getting rid of floor plan charges and local taxes could significantly lighten a dealer’s financial burden.
No Haggling
The online ordering systems will eliminate the arm wrestling and haggling over purchase price that has been a staple of the automobile business since at least the Hoover administration. Say goodbye to paint sealant packages, alarm systems, and other pricey options often forced on customers after they decide to buy a car. On the other hand, dealers often make more money on financing than they do selling cars, so they will see a decrease in that revenue stream under the new agency model.Most shoppers will be thrilled to dispense with the traditional adversarial sales process. In my experience, one well-known dealer in southern New England taught its sales staff to throw a customer’s keys up on the roof and tell them they couldn’t leave until they bought a car. Amazingly, that dealer was highly successful for many years. Go figure.
We sometimes get critiqued for mentioning Tesla in every article about electric cars, but truthfully, Tesla has pioneered so many changes to the car buying experience it would be silly not to give credit where credit is due. Online sales is just one of those innovations.
Franchise Dealer Laws
A final question is, how will this new arrangement affect franchise dealer laws in the states that still have them? No one can predict the future, but it seems this agency model removes one more brick from the wall that dealer groups have built around their business model. The transition to online commerce accelerated by the coronavirus is also undermining that wall. Within a few years, the entire franchise dealer system may be history.Volkswagen deserves credit for rethinking its relationship with its dealers as it transitions to selling electric cars. Nothing ever stays the same in life or in business. Those who cling to the past often wind up getting run over by progress.
The only person who got all his work done by Friday was Robinson Crusoe.
Anything i post over three lines long please assume it is an article lol.
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Inevitable really, and better than each dealer/dealer group trying to maintain its own online sales platform.
Car vending machines. coming soon to the west from the east. why not just cut out the middle man altogether, Each person in the chain takes a slice and the consumer swallows the lot..
Thing is though what incentive is there for dealers to offer test drives if then you can just go direct to vw or carwow etc and get it cheaper..will it kill the market, i doubt it…As then it’s a monopoly
Imo The problem is batterylife and take a toyota prius for instance to replace one new from toyota costs around $6000, to get a recon one 2k but they only swapout the faultly cells and then the others go.. so is it worth it, causing it to be less effective sooner.
overtime.. every phone i ever had it was the battery that gave out it, will be the same with all these cars.. alot will not be worth fixing the older they get and the value decreases..
Plus the internet of things and smart energy means they will use those batteries to store and put back into the grid when needed, adding to the number of discharge cycles of which any battery suffers from and has a limit to how many times it can charge and discharge…
rox Lexus have just given a 1,000,000 Km and ten year warranty to their new batteries, Tesla are about to unvail their 1,000,000 mile battery. Its likely these batteries will still be working in 20 years plus. So a lot of the stories about battery degradation are from the past. The future of EVs is the future of cars ICE cars will be obsolete in 10-15 years.
V2G charging takes very small amounts of electricity from the car, evidence of any loss of efficiency or lifespan has yet to be shown.
The only person who got all his work done by Friday was Robinson Crusoe.
Anything i post over three lines long please assume it is an article lol.obsolete.. All cars are being banned from roads in major cities, not just ice cars… right now..
in 10 or 15 I maybe dead.. could be days, weeks, years or even seconds..who knows..from maybe one of over 1 million ways to die..
I ain’t against ev’s as such, but pollution imo has got less than when i was a kid standing at a bus stop on marlebone road on my way to and from school, with leaded cars pumping out real toxic lead..
So i do get it but, The green sector is run by the energy companies making money keeping us on the hook, to charge us.. Over fossel fuels, they don’t own and have to buy from others.
The car driver is the cash cow and it will be no different when only ev’s are allowed. They’ll charge us per mile we drive on top.. If they allow us to drive. it will be like the dieselgate offer incentives as it’s better but in the end they’ll screw us allover..
What happened to hydrogen cars or those that could run on water, they’d h8 that as they cannot monetise them as they can ev’s. until that last drop of oil is gone, imo it will still be used, maybe just to help make the electric. To power all these devices and robots we gonna need. plus the electric scootors..
cars are not sustainable and the car owner must pay for the demise of the car.. thats the UN stance from agenda 21 which now is 2030. Plus energy beaming technology gonna change everything further but at what cost.. how many people have done 1million miles in a car, not many.. Maybe in my lifetime i have driven 12k a yea, so say for 50 years thats is only 600k.
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