Automotive News Europe — 2023-10-03
Automotive Industry
Skoda is joining a growing number of automakers in Europe that will sell their cars through the direct-sales agency model.
As with other agency retail models, dealers will now sell vehicles on behalf of the manufacturer, rather than purchasing the vehicles directly.
The Volkswagen Group subsidiary will introduce the system slowly, beginning next year with the new Elroq SUV before a full rollout of the scheme for it EV sales to private and fleet customers.
The new sales model is expected to offer financial returns to dealers that are similar to those they have experienced under the current system.
"The planned remuneration allows partners to achieve a similar return as in previous years, if we disregard the past two years. Skoda partners' returns have always been better than those of comparable volume competitors," Jan-Hendrik Huelsmann, Skoda's head of Germany, said, without commenting specifically on the commission level.
All VW brands will rely on a similarly high remuneration for the agency model of about 6.5%, which will avoid cannibalization within the group.
Dealer response
"The launch of the agency model with the introduction of the Elroq and the gradual expansion to new models is in line with our negotiating position,” Thomas Peckruhn, president of the Skoda Dealer Association, said.
Under the new agreement, inventory risk and the cost of refinancing for new cars will be transferred to Skoda. The costs for personnel and buildings will remain with the agent.
However, Skoda does not expect dealers to maintain the same standards under the agency model.
"In terms of the new contract, we will reduce personnel and building standards in the sales department in an effort to reduce pressure on our partners," Huelsmann said.
For Peckruhn, who has not been in favor of an agency model, this is an important step. "Many sales standards are not fit for the future. The new standards would help rectify this,” he said.
As part of the sales realignment, Huelsmann says he will conduct a network audit. By the end of the year, Skoda intends to reach conclusions on the future set-up of its sales network.
Currently, the brand appears to be following the industry trend toward selling its new cars through larger dealerships, with the emphasis on the number of dealers rather than the number of locations.
At present, the Skoda network in Germany comprises more thabn 500 sales locations and more than twice as many workshops.