Volkswagen has proposed a redraft of its agreement with its European dealer network that aims at altering the way its retailers can earn revenue and interact with customers and the factory.
Reports suggest that the deal has a potential path that leads to the US markets as well. It lets automakers build a more direct link with its customers by indulging in revenue-sharing arrangements and easing the infrastructural demands to help dealerships remain profitable.
Volkswagen will provide the dealers with incentives for the sale of upcoming “on-demand” performance software upgrades for customers’ vehicles, such as a temporary 20-hp boost or a post-purchase upgrade to LED headlights — even if they had no direct role in the customer’s decision.
The agreement will be put into effect from April 2020 and will also put an end to expensive brand requirements such as attractive “glass palaces”. The pact for the US will derive certain cues from Europe’s as the latter allows direct sales of cars to consumers over the internet and also, negotiations in the U.S. have yet to begin and have not yet been scheduled, a Volkswagen Group of America spokesman said.
“The changes that are coming in automotive retail represent an industry-wide opportunity, and all OEMs and their dealer partners will need to figure out how to best address these changes,” said the head of sales and marketing for Volkswagen of America, Derrick Hatami.