Volkswagen to Cut Size of Dealer Network, Launch Online Sales

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On Tuesday, Volkswagen revealed its plans to decrease the size of its European dealer network and introduce online sales as it adjusts to varying buying habits.

Volkswagen is pushing to slash costs across all of its 12 brands as a result of the emissions scandal as it faces having to heavily invest in the shift towards the development of electric cars.

In its latest move, it aims to increase efficiency and profitability at its 3,000-dealer European distribution network by an average of 10% and wants to cut the costs of the network to help increase the average return per distributor to 2 percent from 1 percent.

“We have for years been in consolidation mode in all world markets,” said  Juergen Stackmann, the VW brand sales chief, to reporters. “This will surely accelerate somewhat in the next one, two years, also in Germany.”

However, the executive gave no detail regarding the size of planned cost reductions and the number of dealerships that due to be axed under VW’s “future sales model.”

Customers of mass-market car brands like Volkwagen’s are already making greater use of online shopping, enabling them to better compare rival offerings.

Volkswagen and dealers are currently developing a joint online portal, said Stackmann, without giving details.

According to Volkswagen, decreased costs will also come from greater use of new IT, allowing dealerships to slash the time that is needed for servicing cars by as much as 70%.

Stackmann said that on average, a Volkswagen distributor in Europe employs 35 staff and that workforce can be decreased by around four over time or the employees affected can be assigned elsewhere.

He said that under the terms of the new contracts of the carmaker with dealers, to be concluded early in 2018, Volkswagen wants to forego its rights to prescribe workforce sizes, permitting dealers to decrease the number of staff.