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]