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VW backtracks on dealer stipulations with fleets

Volkswagen has ditched a new direct supply strategy, which could have seen some fleets paying more for the German manufacturer’s cars.

It recently introduced a new vehicle supply model, which specified what dealers lease companies could source vehicles from and also how many new vehicles they needed to order before getting additional volume discounts.

The new model required leasing companies to sign standardised agreements with specified dealers if they wanted to earn “premium” discounts, according to the BVRLA.

It also said greater incentives would only apply to leasing companies who bought more than 250 vehicles a year.

The move led to complaints from lease companies who said the new agreement could threaten long-standing relationships with preferred dealers in favour of a “one-size-fits-all approach”.

As a result, the BVRLA took the industry’s concerns to Volkswagen and, following discussions with its head of fleet Vince Kinner, the German manufacturer agreed to amend its changes.

“VW has responded positively and agreed to reduce its discount threshold to 100 cars each year,” explained the BVRLA’s chief executive John Lewis.

“The company has also withdrawn its insistence on only supplying leasing companies with vehicles sourced from dealers within 50 miles of the delivery point.”

Lewis said if the changes were left it would have made it more difficult for smaller leasing companies to compete on lease rates for Volkswagen cars and could have adversely affected Volkswagen’s market share.

However when questioned by Fleet News, Volkswagen was remaining tight-lipped as to why it decided to introduce a new direct supply strategy in the first place and why it later chose to amend these plans.

It has had a direct supply agreement with the leasing industry for a number of years, enabling it to allocate a portion of its production to the sector while eliminating the need for its dealers to stock vehicles and manage supply.

Under that original agreement, leasing companies were able to specify which dealer they worked with and the freedom to negotiate terms.

“The BVRLA is now working with Volkswagen to develop a minimum service level agreement for use when dealing with our industry,” added Lewis “Our members will still be free to develop their own additional service agreements with their preferred dealers.”

Volkswagen refused to comment.

 

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