Volkswagen dealerships will not be the primary means for selling the company’s ID family of electric cars. The parent company, Volkswagen AG, announced today that 100% of VW retail partners have agreed to their new role as an “agent” that facilitates the sale.
Update, May 21: Volkswagen informed us that this new process pertains to Germany only at this stage. As the introduction of the first ID vehicles in the US get closer, VW will share more details about the sales process here.
In the meantime, here’s how things will work in Germany. The customer places an order directly to Volkswagen. When the order is placed, whether online or offline, the customer names a preferred dealer. At that point, the dealer assumes the role of an agent.
Their duties shift from selling the car (and racing back and forth to a sales manager to confirm the price) to organizing test drives, processing the transaction, and making sure the vehicle gets handed over in a satisfying manner.
Critically, the agreed-upon price of the EV and the dealership’s commission is fixed. This could help avoid the entrenched problem of customers wanting to buy an electric vehicle getting a sales pitch to buy an internal combustion vehicle in the showroom.
The sales launch of the ID.3, starting in Europe in June, marks the start of the agency model.
The new process reflects yet another way that electric vehicles are fundamentally changing the auto business. In an official release, Volkswagen said:
The agency model lays the contractual foundation for integrating online business and showroom-based business.
Holger B. Santel, head of VW sales in Germany, commented:
All our partners are now 100% on board. Broad approval from our retail partners for the agency model is a strong signal for the future. From the customer’s perspective, Volkswagen and retail become one unit with the agency model. And this seamless, coordinated shopping experience at all touchpoints is exactly what our customers want.
The dealer no longer has to finance vehicles in advance. We also bear inventory cost and the costs associated with showroom vehicles. We are offering dealers an extremely attractive leasing concept for demonstration vehicles.
Volkswagen also takes responsibility for vehicle financing and bears the responsibility for the returns and residual value risk.
Dirk Weddigen von Knapp, chairperson of the Volkswagen and Audi partner association, said:
The agency model brings significant financial relief for dealers, and that is particularly important at the present time. Our partners can, therefore, focus on what makes retail so indispensable: personal, competent customer care. I am delighted that all partners have signed the jointly drafted agreement. That is confirmation of the great trust in the agency model and our association.
Volkswagen’s technical system that manages the process is internally named “Thunder.” Its goal is also to simplify the consumers’ process for configuring the vehicle. Volkswagen said that configuring the entire vehicle will take no more than 10 clicks.
Legacy dealerships, those who primarily sell gas-powered vehicles, have commonly mismanaged the EV sales process. It’s been one of the weakest links for electric vehicle adoption.
So VW’s new “agent” model should be an improvement. It reflects the fact that savvy EV buyers know what they want. They simply need the dealership to handle the transaction and toss over the keys.
Volkswagen’s shift to this model is a good sign that it wants to maximize EV sales. Removing the dealership as an obstacle is a great development.
The challenge now is to make sure that the process of change that’s starting in Europe will carry over to the United States, where dealerships have a great deal of power.
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