Volkswagen sells the ID family alternatively

VW will introduce the agency model, previously used in the fleet customer segment, to private and small business customers in the I.D. family. This means VW itself will become the direct contracting partner with customers, while dealers will only “facilitate” the sales of I.D. models to private and small business customers as agents. Thus, dealers remain involved, as they must organize acquisition, consultation, test drives, transaction processing, and delivery in coordination with Volkswagen. For this, the dealer receives commission and bonuses comparable to traditional retail operations—even if the vehicle is purchased online. On the other hand, dealers are relieved from financing the vehicle, and the sales process is simplified by eliminating price negotiations. This also saves VW the hassle of "haggling" over prices at dealerships.

However, it was important to involve VAPV. The somewhat clunky acronym stands for "Volkswagen and Audi Partner Association" and represents the interests of approximately 2,400 German sales and service partners for the Volkswagen passenger cars, Audi, and Volkswagen commercial vehicle brands. The association representatives agreed with VW that the agency contract will take effect as a supplement to the new dealer contracts valid from April, after the sales partners have consented.

With the agency model, the customer should be able to switch between online and offline channels at various stages of the purchasing process. For this purpose, the new IT system "Thunder" is being developed, which will be used in dealerships for the first time with the launch of the ID. family. Not much changes for the customer, except that the configuration process will be significantly simplified compared to current models. This is also due to the reduced range of equipment and package options, which VW plans to significantly scale back even for combustion models. This also drastically saves costs in IT and backend systems. Ten clicks should be enough to fully configure the vehicle.

Holger B. Santel, Head of Sales and Marketing for Volkswagen in Germany, explains:

"For the first time, we are the direct contracting partner of customers, but their familiar Volkswagen partner remains involved in the business as an agent. Now, they can primarily focus on customer consultation, and we also relieve them financially. With this concept, we meet the changing customer expectations for a seamless buying experience between online and offline worlds."

The association is also satisfied with the solution after initial statements. Dirk Weddigen von Knapp, Chairman of the VAPV, is pleased that dealers are receiving a reliable and plannable remuneration, "regardless of whether the customer buys their vehicle online or at the dealership." Another advantage for the dealers: VW takes on the responsibility for marketing the vehicles and their residual values. VW also wants to win over dealers in the USA for new sales models and push the I.D. there as well: US dealers who gear up for the sale of the ID. family are to receive a 50 percent subsidy from the manufacturer for expanding their facilities. For local marketing, Volkswagen is even offering up to a 75 percent subsidy. This is because electric cars in the USA are primarily popular on the East and West coasts. Another problem for the dealers: They need to install their own charging infrastructure and establish separate high-voltage rooms in the workshops.

What does that mean?

VW already announced in 2019 that the I.D. family would also get new sales channels. With the solution now found, they are trying to find a middle ground between online and dealership sales, keeping all options open for the customer – without losing the dealer as an important "backup." It sounds like a successful compromise.