Dealers will assume the role of ‘agents’
Bottom line: The popularity of online shopping has skyrocketed over the past decade, to the point that it’s now the default choice for millions of consumers. It’s no surprise, then, to see some car manufacturers begin to push this side of their business more heavily. Indeed, Volkswagen announced yesterday that sales for its ID family of electric cars will be much more online-focused.
Moving forward, most ID vehicle customers won’t be walking into a dealership to haggle over prices. Instead, they’ll likely place the order for their car online, directly from Volkswagen, at which point they’ll be prompted to select a “preferred” dealer as a local point of contact.
The dealer will then assume the role of an “agent,” while still receiving the same compensation and commission that they would under the traditional dealership model. However, their actual job will be less focused on sales, and more on consultation, handling test drives, and “vehicle handover.”
There are plenty of benefits to this new sales model for both dealers and customers alike. Customers won’t have to sit through a frustrating sales pitch when they already know what vehicle they want, and dealers can rely on a consistent, “calculable” commission because the vehicle’s price will now be set by Volkswagen — there are no surprises.
Furthermore, Volkswagen says it will take on the burden for vehicle financing, in addition to bearing inventory costs and the “costs associated with showroom vehicles.” All in all, Volkswagen seems keen to reduce the financial burden for dealers while encouraging them to take on a more customer service-oriented role in the sales process.
Though these changes might sound a bit controversial to some, Volkswagen says 100 percent of its retail partners are on board, which is quite the achievement. Volkswagen calls this new sales process the “agency model,” created with the goal of unifying the showroom and online experiences. It remains to be seen how well the agency model will work for dealers, customers, and Volkswagen itself in the long run, but so far, it sounds like a win-win for everyone.
The new model is expected to take effect in European markets come June, with the launch of Volkswagen’s all-electric “ID.3” hatchback.