Automotive Dealers Predict Continued Price Escalation at Volkswagen and Audi
A looming price surge for vehicles from Volkswagen and Audi is anticipated by dealer networks, driven by escalating operational costs and a complex regulatory landscape. Alexander Sauer-Wagner, chairman of the Volkswagen and Audi Partner Association, recently told “Handelsblatt” that dealers are experiencing “increasing price pressure” while simultaneously facing rising expenses. This situation, he warned, strongly suggests higher list prices for consumers moving forward.
The challenges facing dealerships extend beyond simple production costs. Skyrocketing interest rates, inflated energy prices and a persistent struggle to attract and retain personnel are hammering profitability. Compounding these pressures is a growing burden of regulatory compliance, forcing dealerships to dedicate more resources to documentation, reporting and adherence to increasingly complex rules. Sauer-Wagner characterized this as a scenario where “we work more, document more, report more – but at the end, less remains.
The emphasis on regulatory compliance raises questions about the broader policies impacting the automotive sector. Critics argue the current regulatory environment, designed to accelerate the transition to electric vehicles and bolster sustainability, is disproportionately affecting smaller dealerships, potentially leading to consolidation and reduced competition. The increased administrative overhead, coupled with higher operational costs, risks pushing smaller, independent dealerships out of the market.
While acknowledging the headwinds, Sauer-Wagner expressed cautious optimism regarding the potential for electric vehicle (EV) sales. He emphasized that the monthly lease rate, rather than the initial list price, will be the key factor in consumer adoption. Currently, EVs are primarily sold through leasing agreements and the viability of EV sales hinges on bringing lease rates closer to those of comparable internal combustion engine (ICE) vehicles. Sauer-Wagner projected a potential convergence of these rates by 2026, representing a significant shift in the market dynamic.
Recent price adjustments from Volkswagen and Audi – a 1.5% increase from Volkswagen in August (excluding electric models) and a 2% plus increase from Audi on its ICE vehicles in November – point toward this pre-emptive pricing strategy. These moves suggest a concerted effort to safeguard profit margins in the face of rising costs, potentially setting the stage for further price hikes across the brands’ portfolios in the years to come and highlighting a complex tension between governmental environmental mandates and the financial stability of the dealerships tasked with implementing them.
