Volkswagen dealers in the United States were horrified by the company’s announcement last week that it plans to introduce two new electric vehicles — a pickup truck and an SUV — to America using the Scout brand it acquired when it recently bought the truck maker, Navistar. Why are they upset? Because the company never told them about the new Scout brand, or how it plans to sell it.
Dealers are concerned that Volkswagen may be planning to sell those vehicles directly to the public and cut them out altogether – and judging by company officials’ statements since the announcement, their concerns may be entirely valid!
Andrew Savvas, head of sales and marketing for Volkswagen of America, told the 650 US dealers in a letter dated May 13 that Scout would be an independent brand within the group, and that they (the Volkswagen brand) would have no claim to its products.
Volkswagen Group Chief Financial Officer Arno Antlitz said after the announcement last week that the Scout “will be a separate unit and brand within the Volkswagen Group to be managed independently. This is in line with the group’s new steering model – small units that operate intelligently and have access to our technology platforms to take advantage of of synergies.” No executives for the new unit and brand have been announced, and no details have been revealed about where the Scouts are manufactured.
Lack of information is an invitation to start rumors. A Volkswagen dealer reportedly said Car News“If we were to share anything, they would have told us something. But they did not say a word to us, either before or after the announcement.”
Volkswagen says it’s targeting 250,000 sales annually for the new Scout, which seems entirely possible, given Americans’ fondness for off-road and all-terrain vehicles to take them to the grocery store and the office. Ford can barely keep up with the demand for its new Bronco, which is as close to a Jeep Wrangler replica as you can get without being sued. Anything indicating that it is an SUV is practically guaranteed to achieve sales success.
The problem, of course, is that many US states have laws that prohibit direct selling. The whole world has moved to internet marketing, as Amazon will prove successful, but the sky forbids selling cars in this way. It is un-American and unconstitutional, and besides this, car dealers have paid good money to elect “friends” in the state legislatures and expect a return on their investment!
Volkswagen has reshaped its relationship with its dealers in Europe, now selling its electric cars directly to customers but delivering them through dealers, who then remain a point of contact for owners. No doubt Volkswagen dealers in the US are aware of these changes on the continent and are reluctant to see something like this happen on this side of the pond.
“Creative Destruction” is a component of capitalist theory. Kodak was the king of the mountain in photography until he wasn’t. Nokia, Xerox, IBM, and many other companies have gone from market dominance to near insignificance. Electric cars are disrupting the traditional auto business in ways no one (except Elon Musk) expected a decade ago,
Car dealers can see a train wreck waiting ahead for their business model and are desperate to maintain their market dominance. It may be a losing battle.
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