Volkswagen Dealer Payout Leaked; Automaker Plans to (Gasp!) Lower Its Prices

by Steph Willems

Published: August 26th, 2016

volkswagen dealer payout leaked automaker plans to gasp lower its prices

It didn’t take long for sources to squeal about the size of the settlement forged yesterday between Volkswagen and its ornery U.S. dealer network.

According to people familiar with the deal, 652 VW dealers will share about $1.2 billion to offset losses from unsold vehicles and sunk costs, Bloomberg reports. But cash is only one part of the company’s plan. The other involves its customers’ wallets.

According to the report, VW will offer other dealer benefits on top of the cash payments. The sources didn’t say what those benefits might be. The settlement brings VW’s total U.S. scandal payouts to roughly $16 billion.

Dealers took their corporate overlord to court after feeling that they’d been left high and dry in the wake of the diesel emissions scandal. Many spent large amounts of money upgrading their dealerships, only to have their lots filled with sidelined diesels and few customers.

The automaker has already agreed to give its North American operations more autonomy, as well as boost production of popular gas-powered models (and potentially popular future models like the 2017 Golf Alltrack). VW seems to recognize that product is only half of the equation. Pricing must be attractive.

Speaking to Bloomberg, Alan Brown, chairman of VW’s U.S. dealer council, said the company plans to lower the sticker price on its vehicles. The automaker “is looking at this with a volume mindset,” Brown said.

Consider this proof that VW’s semi-premium product/pricing strategy is dead, at least in the U.S. To sell an Alltrack, it’s a no-brainer that it must be competitive with its Subaru rival. The automaker wants a broader crossover and SUV lineup to boost its sales, which means the looming Teramont three-row SUV needs to be priced to compete with the Japanese, not the Germans.

[Image: Volkswagen]

#DealerNews #Pricing #ProductPlanning #Volkswagen #VwDieselScandal

Steph Willems

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Joeveto3 on Aug 27, 2016

Time to bring the Polo GTI over?

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Speedlaw on Aug 27, 2016

Interesting times for VW. They lost me not on the TDi I owned but when I did a rear brake job and had to buy a special tool because they spec some odd fitting. What is strange, is that between the settlement and the good will package, it works out to almost $4k in "refunds" I sort of randomly get back on this car. Subtract the Diesel Particulate Filter failure at 83k for 1300 non warranty dollars, and it is still pretty ok. I will let you know when I get the buyout check :) I had a GTi 16v, a Scirocco with a callaway turbo, two ur-VW diesels, with a few others tossed into the family. You had to work to lose me.

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