12 October 2019

Almost exactly a year ago VW announced it was going to “fundamentally” restructure its sales model. Despite being down-played by the national sales company in the UK, the franchise agreement was re-written to give the manufacturer more direct contact with the customer but also better integrate and better remunerate the franchise holder in a digital sales process.

At the time a VW spokesman described the objective of the new agreement being “to provide seamless individual round-the-clock support for customers going far beyond vehicle sales on the basis of a unique Volkswagen customer ID”.

They went on to add: “The car buying experience itself will also change. On-line sales are to be massively expanded and direct sales are to become possible. Five new sales and service formats such as city showrooms or pop-up stores are to be added. At the same time, the sales organization is to become more flexible and efficient.”

The customer ID will allow not only better tracking of owners but also simple post-sale purchases – something that many OEMs are looking to get more heavily involved in, particularly as the swing to electric cars gets under way and lower aftersales revenues are expected.

However, as with any change in a dealer agreement, with this new contract (which came into play in April) there are some groups that will continue to be a part of the Volkswagen network and some that will say it’s not for them, or at least to evaluate which sites are going to be the most successful; keep them and perhaps sell the rest.

We’ve already seen Inchcape sell four of its VW dealerships to Group 1 Automotive, but given the number of rumours flying around the industry at the moment I wouldn’t be surprised if we saw several high profile groups either significantly reduce their VW site number or completely get out of the brand while others increase their VW numbers in the near future.

The point here is that while this is ‘just’ the VW brand (not even the VW Group), in the longer term this is likely to be the way many heavy weight brands go as electric cars and online sales rise causing reduced margins at retailers. The solution to this is economies of scale and, as VW is predicting, sales of digital upgrades to customers who’ve already bought the car.

Tristan Young

Editorial Director

Auto Retail Network

Tags: Group 1 Automotive, Inchcape, VW