News

Analysis: online-led car sales shake-up on the way

The idea is to mirror the more modern business set-up of electric car start-up companies like Tesla or tech firms like Apple, where salespeople are replaced with ‘product experts’ and there’s little or no high-pressure sell.

Volkswagen’s move to agency is part of a multi-billion-euro investment in software that promises to change the whole dynamic of the buying process. “The aim of the agency model is to promote the customer experience to a completely new level,” outgoing sales boss Jürgen Stackmann said in August.

Volkswagen customers will be encouraged to establish a profile (ID) on the company’s website or app, starting with the ordering process, and the goal is that everything will be handled within that online profile, from service reminders to wireless software updates for their car. It’s where they will also sign up to data packages for the connectivity and track orders from build to delivery. Any time they order a new upgrade or data package, their nominated dealer will get a cut of the revenue.

It’s one of the ways Volkswagen and its sibling brands hope to catch up with Tesla, which it sees as more than just an EV rival. “Tesla customers experience their car like a computer device, with updates every two weeks or so. This capability is something we don’t have yet,” said Volkswagen Group CEO Herbert Diess during a recent investors’ call.

The big change operationally in switching to agency is that the financial burden shifts massively to the manufacturer, which gets paid only when the car is bought, rather when it’s delivered to the dealer.

But the financial risk could be more than offset by savings, which, Accenture recently estimated, could add up to a 4% reduction in the cost of retail. The report suggests that in a full agency model, brands could hide list pricing and just focus on the monthly fee, especially for markets like the UK, where more than 80% of cars sold to private customers are financed in some way by the car maker’s captive finance company.

The price can still be manipulated by the car maker to shift stock, likely using shifts in the monthly figure. “There will be national offers out there, but the deal will be the same from one retailer to another,” said Gupta.

This pricing parity will help protect residuals, which are hurt by deep discounting, and so can theoretically help keep a lid on monthly figures by pushing up used prices, benefiting new car buyers. Gupta said: “The bizarre thing is that it’s in everyone’s interest that we’re not discounting products.”

Nick Gibbs

READ MORE

New moves: How dealers are trying to stimulate car sales 

Analysis: Are car sales bouncing back? 

Volvo: Lockdown has changed car sales forever

Leave a Reply

Your email address will not be published. Required fields are marked *