8:13 am, November 28, 2024
Volkswagen Group dealers have been told the firm will be canning agency sales for the foreseeable future.
Outgoing group MD Alex Smith wrote to franchise partners yesterday to explain to them that agency sales would be paused.
Volkswagen says agency sales is still its ‘long term’ aim, but has not given any indication of when it will return.
Agency sales see car dealers act as handover agents for cars sold directly by a car manufacturer on their own website. Dealers are paid a handling fee for the deal.
Currently Mercedes and Volvo in the UK operate under this style of agreement, while other manufacturers have paused or cancelled their agency sales plans completely.
Stellantis, BMW and JLR have all paused their plans to move to agency sales amid growing concern in the industry that it doesn’t work.
VW Group boss Smith’s note to dealers – shared with Car Dealer – said: ‘Our industry is in a process of transformation, and we must continue to ensure we are set up to cater for the needs of our customers and their evolving mobility requirements.
‘We’re confident that the agency model has numerous advantages, including the potential for a seamless customer journey on and offline, and clearer customer insights. And this remains Volkswagen Group’s long term strategic sales model.
‘Our introduction of retail BEV (battery electric vehicle) agency models, selling electric vehicles to retail customers under a non genuine agency agreement, enables the basis for a future proof sales experience. However, the dual distribution model with ICE and BEV models sold under different frameworks is complex.
‘At the same time, we have to acknowledge that the BEV transition is progressing in the UK and other countries more slowly than expected, and the challenging market conditions we’re all experiencing need a realistic and responsive approach.
‘We must continue to adapt to the environment as it is today, rather than as it was forecast to be some time ago, while we remain fully committed to our long term ambition to move towards agency, we will be opening discussions with you on a short to medium term adjustment of our strategy for private BEV sales of Volkswagen, Volkswagen Commercial vehicles, Audi and Skoda models.
‘Please note, retail BEV sales will continue via the agency model for Cupra, which has been the forerunner of the agency model since the brand’s inception.’
David Kendrick, partner at Cooper Parry, asked on LinkedIn which brand his followers thought would be next to delay agency sales.
He said: ‘So after years of talk around agency sales in the franchised dealer marketplace and most people skeptical and very much of the view it won’t work, today sees the first brand backing away from it formally with VW removing agency.
‘It was always going to happen as soon as it became a push market with vehicle volumes needing delivering.
‘The dealer franchise model was never broken – I am so confused as to why it needed changing.’
In a release about the changes, VW’s Marco Schubert, member of the 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.’
