Following the German automaker’s emissions scandal, the U.S. dealers are looking to repair the financial damages that occurred. A meeting took place in Germany last week where three of these dealers made proposals to improve the situation with regards to the brand’s U.S. strategy.
Alan Brown, the chairman of the U.S. dealer council for Volkswagen, stated for Automotive News that it is too soon to discuss any reached settlements after the proposal pitch. He added that “I encouraged Volkswagen to think of a strategy for how they’re going to approach the dealer network on franchise damages. Obviously, that’s the pink elephant in the room.”
The fixture after the scandal will be one of the most important topics addressed by VW executives, including Herbert Diess and Hinrich Woebcken, at the National Automobile Dealers Association convention that will take place at the beginning of April in Las Vegas.
With 650 dealers in the U.S., Volkswagen has seen the franchise witnessing a decrease in sales and new diesel deliveries have frozen. Alan Brown said that a VW dealer in Chicago witnessed a $6 million buy-sell transaction terminate a short period after the EPA revealed VW’s violations in September. In order to reduce the financial impact on its dealers, VW has given them discrete payments worth around tens of thousands of dollars per month for the last six months alongside other financial programs.
Brown added that “If an average dealer is getting $20,000 a month in discretionary money, that’s $240,000 per year. If they deem this to be a four-year process, that’s going to be just south of $1 million for that particular dealer.”
In the meeting that took place last year, Diess and other VW executives have pointed to opting to a mass-market strategy, the main priority being selling compact and midsize sedans to increase the brand’s auto volume in the U.S.