Failed: Volkswagen Abandons Agency Model for Electric Vehicle Sales in Europe
Volkswagen will once again sell electric vehicles to private customers through a traditional dealer network in all European markets, reports Handelsblatt. In Germany, Volkswagen had already abandoned direct sales last year.
What's Known
The decision was made after lengthy negotiations with dealer associations that criticized the agency model from the start. Volkswagen's sales director Martin Sander confirmed to the publication that the company is returning to the classic scheme. According to him, the entrepreneurial potential of dealers cannot be replaced by another sales model. The exception remains only for corporate clients — the agency model will remain there.
Volkswagen implemented the agency model in 2020, inspired by Tesla's approach. The manufacturer set prices and assumed financial risks, while the dealers received a fixed commission and effectively acted as intermediaries. The company aimed to standardize sales, reduce costs, and establish direct contact with customers.
In practice, the system proved problematic. Volkswagen had to adjust balances for thousands of unsold electric vehicles, and the expected simplification of processes for dealers did not occur. The parallel existence of two schemes created additional complexity: ICE vehicles were sold under the old model, electric vehicles under the new one. Sander now admits that such a division only complicated operations.
Nevertheless, as recently as spring 2024, Volkswagen discussed internally the possibility of extending the agency model to internal combustion engine vehicles, aiming to reduce sales costs by about 10%. However, resistance from dealers continued to grow, and the company decided to review its approach.
Volkswagen is not the only automaker to adjust its strategy. Land Rover paused the implementation of the agency model in the UK, BMW took a wait-and-see approach, and Ford decided not to rush changes in the European market.
Source: Handelsblatt
