21 May 2020

Volkswagen will launch its ID range of full electric cars through an agency agreement for retail sales in Germany. After initially confirming the UK would follow suit, and despite a pan-European retailer agreement, Volkswagen UK has now changed its position and has said it will not move away from a franchise arrangement for the launch of the ID3 which is due in mid-July. However, the firm refused to rule out a switch at a later date.

While Volkswagen, and other brands, have been switching away from franchise to agency agreements for fleet sales for some time, the ID3 is understood to be the first car to be sold to German consumers this way. Future, all-electric, ID models will also use an agency agreement. However, VW said it will keep its franchise arrangement for its other retail cars currently on sale.

In Germany, 100% of VW’s retail network has signed up to the agency agreement – itself understood to be part of the most recent pan-European dealer agreement first set out 18 months ago, as exclusively revealed by Auto Retail Network.

A UK spokesman originally said: “We are looking at going the same route. It makes life a lot easier when leasing and selling online, plus knowing who the customer belongs to.”

However, this was then updated to: “In the UK we will not be launching the ID3 with an agency model.”

Agency agreements mean the manufacturer can control the price of the vehicle and advertise a national price, simplifying the online sales process.

A VW spokesman in Germany said: “The sales launch of the ID3 marks the start of the agency model for private customers and small commercial enterprises that has already proven its worth for major [fleet] customers over many years.

“The agency model lays the contractual foundation for integrating online business and showroom-based business. From sales launch, customers can order vehicles from the ID family direct from Volkswagen. At the same time, they select their preferred dealer for personalised customer care and local services.”

“Under the new model, dealers assume the role of agent for selling cars to private customers and small commercial enterprises. They look after acquisition, sales consultation, organising 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.”

One Volkswagen retailer that Auto Retail Agenda spoke to said he welcomed the move as he would not have to worry about discounting or carrying the cost of financing the vehicles in advance of sale.

Dirk Weddigen von Knapp, chairperson of the Volkswagen and Audi partner association in Germany, said: “The agency model also responds to growing customer demand to switch seamlessly between online and offline channels during the entire buying process. Subject to the customer’s consent, available data on the customer and their vehicle is used to communicate with them individually and consistently across all touchpoints. “Thunder”, the new IT system, is being developed and will debut at dealers with the launch of the ID. family. The configuration process is being simplified, too: It will only take ten clicks to configure the entire vehicle.”