Volkswagen Group is radically overhauling its business strategy to save money and stay afloat, and it may axe its Tesla-inspired direct-to-consumer retail model for EVs in major European markets.
In a press release, VW said that selling EVs through direct-to-consumer models while also selling ICE vehicles via traditional retail operations was too complex in Europe’s weak auto market, pointing to what it says is the slow pace at which consumers are buying EVs.
“Given challenging framework conditions, we will have to reevaluate if our current agency model for all-electric vehicles delivers the best possible customer experience,” Marco Schubert, the VW Group board member responsible for sales, said in a statement. Still, he added that direct-to-consumer sales will remain a “long-term target” for the automaker.
Tesla’s revolutionary direct-to-consumer model, which bypasses traditional dealerships in favor of selling cars directly through its own network of stores and online, has completely disrupted the way in which cars are sold in Europe, with many legacy automakers trying their best to follow suit in a highly regulated auto market. In VW’s case, its EVs can be purchased via dealers, and the dealer earns a fixed, lower margin without needing to take on marketing costs or carrying costs for inventory.
The possible retail revamp includes VW brand vehicles but also Audi, Skoda, and VW commercial vehicles in France, Germany, Poland, Spain, and the UK.
In 2020, VW introduced its direct-sales model for EVs, and the results from its review are expected to be released in March of next year. VWs’s Cupra brand, however, will continue to sells its EV under the direct-to-consumer model, as will all VW vehicles sold in Ireland and Sweden, regardless of drivetrain.
This comes at a time when VW is radically restructuring its business to cut costs, and plans to close down three factories in Germany – the first time in the company’s 87-year history that it is closing factories on its home turf. The plan includes cutting tens of thousands of jobs and slashing pay for 10% of its remaining staff.
The brand is also seeking to streamline production and development processes, shaving off months on the development cycles of specific projects to help tighten the belt, reports Automotive News Europe.
VW is closing its Audi plant in Brussels where it makes soon-to-be-retired Audi Q8 E-Tron – an €80,000 electric SUV that suffered from low sales – in a few months. The company announced that it will close the factory on February 28, 2025, with 3,000 workers losing their jobs in the Brussels area.
Photo credit: Volkswagen Group
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