Volkswagen is retreating from its agency sales model for private customers across Europe, marking a significant shift back towards a traditional dealership structure for electric vehicle sales. The move, confirmed by Volkswagen brand sales chief Martin Sander in an interview with the Handelsblatt, signals a tacit acknowledgment of the model’s shortcomings and attempts to mend a strained relationship with its dealer network.
The agency model, implemented in 2020, was initially inspired by Tesla’s direct sales approach. Under this system, Volkswagen assumed control of pricing and sales risk, relegating dealerships to the role of intermediaries with significantly reduced profit margins. While the intention was to mirror Tesla’s streamlined efficiency, the reality proved to be far more complex and generated considerable friction with partners. Critics argued the model unfairly burdened dealerships, limiting their entrepreneurial freedom and incentivizing behavior contrary to Volkswagen’s overall EV strategy.
The decision to abandon the agency model, previously announced for Germany at the end of 2024, now encompasses all European markets. This represents a reversal of earlier considerations to extend the model to internal combustion engine vehicles, a proposition that has now been definitively shelved.
The move is not just a strategic adjustment; it’s a political one as well. The ongoing conflict with dealerships had been escalating, potentially threatening Volkswagen’s ambitious EV rollout targets. While the agency model remains in place for fleet business, where it has reportedly been “proven effective” the shift back to the traditional model underscores a recognition that dealer relationships are paramount to long-term success. Analysts suggest this turnaround indicates a broader reassessment within Volkswagen regarding the balance between centralized control and the vital role of independent dealerships in reaching consumers and fostering brand loyalty – a lesson learned from an experiment that proved more challenging than initially anticipated.
