VW's new dealer strategy; plans transparent spare prices too

Volkswagen India witnesses monthly sales of 3,974 units on an average, with 3 cars in its product line-up - Polo, Vento and Jetta. For the longest time, VW has solely relied on these 3 models, giving them timely updates. The Passat, Beetle and Touareg have witnessed a rather forgettable fate in India. The company's poor domestic sales performance led them to cut marketing and operational costs too. With an aim to strengthen its fundamentals, the company has now designed a new strategy to boost sales as well as change public perception .

The first part of this strategy would be to offer higher incentives to the dealers. VW will now provide 10-12% of a car's value as commission to the dealers. Earlier, the company used to provide 5-6% gross margins, while the mass market norm is in the range of 3-5%. Prior to this move, dealers were overcharging on spares and services due to weaker sales, in order to sustain. Several complains regarding the same had been received by the company.

Next, the company will publish all spare part prices on its website. The copy of all the service bills will be monitored to identify any sort of overcharging by dealers. Non-performing dealers are being identified and the defaulters are likely to be expelled too. The company wants to negate the perception of their cars being expensive to maintain.

New launches from the company are expected in the second half of 2015 with the new Beetle; other models may follow suit.

Source: The Economic Times