27 November 2024

After several years of preparation and adoption, Volkswagen Group looks set to back out of its agency plans for EVs, for the majority of its brands, and potentially return to a more standard franchise model.

VW Group’s Marco Schubert

Volkswagen Group confirmed it is holding a “review of its sales model” which will be concluded by the end of Q1 2025. A spokesperson for VW Group added: “While the ‘Direct to Customer’ approach with a full agency [approach] remains the long-term ambition, changing framework conditions might require changes in the short- to mid-term to ensure the best possible customer experience.”

VW blamed the review of retail sales agreements on a slower than expected uptake of EVs and the complexity of selling EVs under agency in parallel with ICE vehicles under a franchised model. The OEM added that Cupra would stick with agency and the review applied to VW, VW Commercial Vehicles, Audi and Skoda. Fleet sales will continue under the existing agency agreement.

A spokesperson said: “Due to the slower transition to electric mobility across the industry, two sales models for private customers would need to be operated in parallel longer than originally anticipated: The agency model for all-electric vehicles and the indirect sales model for vehicles with other drivetrains. Maintaining this high level of complexity for an extended period of time would be a key challenge for the sales organisation. Therefore, a joint review process with the wholesale and retail organisations will start immediately to determine whether returning to an indirect sales model for BEVs might be a favourable alternative for the short- to mid-term.”

The group has been rolling out non-genuine agency agreements for its electric cars brand-by-brand over the past few years. VW first muted the move to agency in 2020 around the launch of the ID3, a story exclusively revealed by Auto Retail Agenda. However, it was Cupra that went first in 2021.

VW, Cupra and Skoda have already adopted non-genuine agency for EVs and Audi was due to move over with the recent launch of the Q6 electric SUV following a delay from March.

The move by VW Group follows Stellantis, Ford and JLR which have also backed away from direct sales models in the past year. Lotus and Polestar have also moved away from direct sales models.

Marco Schubert, member of VW Group’s extended executive committee for sales, said: “The full agency with direct sales to customers clearly remains our guiding star in the long-term. However, given changing framework conditions we have to re-evaluate if our current agency model for all-electric vehicles delivers the best possible customer experience. Therefore, we will initiate a joint review process with our wholesale and retail organisations whether returning to an indirect sales model might be a favourable alternative in the short- to mid-term for selected markets.”

The agency announcement follows VW Group’s plan to reduce both the number of retail partners and the number of locations for its portfolio of brands including Audi, Seat, Skoda, Cupra and Volkswagen, a spokesperson has confirmed.

VW Group currently has 132 retail partners operating 519 new car franchises, according to Auto Market Data. These sales points are operated from 447 showrooms.

As reported in Auto Retail Agenda at the weekend, The Irish News claimed the number of partners would shrink to just 25, a suggestion VW has not denied.

Confirming the restructuring to Auto Retail Agenda a VW Group spokesperson said: “We have not confirmed the number, but it will be smaller than it is now.”

Tags: agency, Volkswagen Group UK