Volkswagen Dealer Agreement

“This is a different market than Europe and we have to do things in a way that makes sense to the United States,” Derrick Hatami, director of sales and marketing at Volkswagen of America, said in a written statement to Automotive News. “The upcoming changes in the automotive retail trade represent an industry-wide opportunity, and all OEMs and their trading partners need to find the best way to address these changes.” In Germany, this twilight reality has shaken distributors of all brands. Average market returns of $200 billion fell last year, despite historically high new car sales and sales growth of just 1.3 percent, which could pose a significant threat to profits moving to the automaker. In practical terms, this means that Volkswagen becomes the direct co-contractor of their customers, while dealers provide the sale of the ID. Family to private customers and small commercial customers “only” as agents, which mainly includes support, advice, testing execution, business management and delivery in agreement with Volkswagen. In return, the dealer receives a commission and a bonus, much like in the stationary store – even if the vehicle is purchased online. “At the same time, the dealership reduces the financing of the vehicle and the sales process is simplified by the elimination of price negotiations,” explains Volkswagen. Stackmann said VW would at least relax in Europe, standards that predicted how mechanics should undergo additional training each year. And the brand will end unyielding quotas that prescribe, for example, the relationship between a distributor`s administrative staff and its sales team. The agreement, due to come into force in April 2020, will also end brand requirements for expensive “glass palaces” in favour of more sober and less expensive distributors. It was shown to European traders this month, after more than two years of negotiations. Payments go to the “preferred” dealer Volkswagen and “Volkswagen and Audi Partnerverband”, selected in the customer`s digital profile, have agreed on a new distribution model for the ID family in Germany all-electric.

A format similar to that of the agency model for large clients, which has already proven itself for many years, will also be the subject of an application for IDENTIFICATION models sold to individuals and small businesses. Following the green agreement of the trading partners, the agency agreement will be added to the new dealer contracts that will come into force from April. While Volkswagen and other brands have been on the verge of switching from franchise contracts to agency contracts for fleet distribution, the ID3 is considered to be the first car to sell to German consumers. Future all-electric ID models will also use an agency agreement. Vw, however, announced that it would maintain its franchise agreement for its other retail vehicles currently in retail. The pact may form the basis of a new U.S. trade agreement, but it is not directly transferred. One reason: the European agreement allows the direct sale of vehicles to consumers via the internet, while VW does not provide for more than 5%.

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