The centralization of pricing continues: VW is expanding the agency model to combustion engines. If this results in up to 10% more margin, this is highly attractive on the one hand, but on the other hand, conflicts are preprogrammed. It is worth keeping a close eye on this development.

“Germany’s largest car manufacturer Volkswagen wants to restructure sales in Europe in the coming years. The plan is to use the so-called agency model not only in the distribution of electric cars, but also in combustion engine vehicles. This was learned by Handelsblatt from industry circles. (…) The sales route is inspired by providers like Tesla, who only offer electric vehicles and who bring their cars to customers largely without intermediaries. This saves a lot of money and is supposed to create more customer loyalty. A study by PwC subsidiary Strategy& already assumed 7.5 percent lower sales costs in 2021. At VW, there is even talk of ten percent in sales in Europe behind closed doors. (…) With the expansion of the agency to the combustion engine world, Volkswagen would go one step further than the competition and resist the current mood in the industry to some extent. Because by now, the first car manufacturers are quite critical of the sales model. For example, the British brand Land Rover stopped the introduction of the agency in their home market, and Ford also wants to take its time with the conversion of sales in Europe.”

– Lazar Backovic, editor, in “VW annoys its dealers” – the manufacturer wants to change its distribution and not only sell electric cars, but also combustion engines on its own account. Confidential discussions are ongoing – and causing trouble”, Handelsblatt from 24, 25., 26. May 2024, pages 22 and 23, No. 99

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