Volkswagen and Audi plan big dealership network changes
19 May 2017
19 May 2017
Plans for changes to the Volkswagen and Audi dealership networks have been met with caution by one of the manufacturer’s partner groups, as the changing landscape of vehicle sales emerges.
According to a statement by the Volkswagen and Audi Partner Association (VAPV), the manufacturer group wants to make big cuts across its dealer business and remove key areas from the trade while also planning to tighten standards. This follows news in January 2017 that Volkswagen (VW) wanted to introduce new dealership and service contracts to its existing network.
Now, Audi intends to bring fleet sales in-house, dealing with companies directly rather than having them go to a dealer to do business. In addition, it also plans to offer this service online, in order to curb competition between traders and therefore impose higher prices and better margins to reap profit.
The manufacturer also wants to sell digitised products to drivers following their vehicle purchase and has therefore asked its network to provide them with direct access to customer data, which VAPV believes will be a problem for data protection as well as tarnishing a group’s relationship with its customers.
Dirk Weddigen von Knapp, Chairman of the association, comments: ′extending direct deliveries of the company’s brands would constitute an attack on the jobs in our car dealerships and would immediately burden our sales and service quality.’
The planned changes could also see Audi hold back some models and options from some dealerships, to reduce the risk of competition and therefore any pricing wars, while also ensuring that offers are tailored to customer demands in that region. Audi is the first brand in the VW Group to enter into negotiations about the changes in dealership contracts, with VAPV seeing the company as the pioneer for other brands in the group.
The news would mean that dealerships are likely to be controlled in the prices they charge with customer deals off the table, especially if they cannot buy the same model cheaper elsewhere. In addition, taking control of fleet sales directly could cause some traders to close, especially if this market is their main profit maker. Contracts are expected to come into force during Q3 2017, however VAPV has indicated that while it doesn’t agree with the terms being offered, it will provide its own ideas to the manufacturer.
Moving sales online would also cost jobs. In the UK, a recent study revealed that online car sales could cost 27,000 UK automotive sales jobs by 2027, when″¯one in five cars will be sold on the internet.
Meanwhile, VW has also started the process of choosing a new CEO for when incumbent Matthias Mueller stands down in 2020. The company has indicated that it wants to begin the process and take its time, while also planning to pick someone from within the manufacturer, rather than a new name. This comes as Mueller is investigated over his involvement in the diesel scandal during his time as the head of Porsche AG.
Photograph courtesy of Audi