We’ve discussed at length the Volkswagen diesel scandal that was finally discovered last August and unveiled publicly in September. Over the past year we’ve heard about how many Volkswagen executives have lost their jobs or resigned due to this scandal and even talked about the possibility that the VW logo would no longer sell vehicles in the US because of this scandal. At the time the scandal was revealed, Volkswagen was in the midst of one of the best sales years they have ever experienced, and then the bottom fell out for them because of a complete lack of trust for the brand with the findings of the diesel engine issues.
While we’ve seen the fact that Volkswagen is prepared to pay customers to replace their vehicles or repair the defeat system to ensure the vehicle is much closer to the emissions standards that are in place, one group of VW partners has not been discussed; the dealers. As an invaluable part of the business of selling cars for Volkswagen, knowing dealers are still partnered with the brand is important. This relationship seemed to be on the verge of collapse with former US CEO Michael Horn resigned, he was considered a champion for the dealers and now the US dealers didn’t have a champion.
Because many dealerships upgraded their showrooms and facilities on the promise of stronger sales before the diesel scandal took place these dealers felt they might be left holding the bag in this relationship. In order to improve the relationship with dealers Volkswagen has agreed in principle to pay dealers back for claimed losses from the scandal. This certainly will cost Volkswagen quite a bit more money but this will be where they can actually begin to recoup some of the money lost because investing back into dealerships can only strengthen their sales position.
While the specifics of the deal haven’t been approved and the agreement is only an agreement in principle this is an impressive and important first step toward repairing the relationship between the parent company and the dealers that sell their vehicles in the US. Without this agreement dealers could have been left with the loss of sales and expenses incurred to upgrade their facilities which might cause some dealers to choose a different brand to sell and severe ties with Volkswagen for the future.
Now that Volkswagen has agreed to pay dealers for their losses, at least a portion of them, the movement forward seems to be coming to light for Volkswagen. This news comes not too long before Volkswagen is about to reveal its new electric platform and begin to offer vehicles to the market that are powered strictly by electricity in order to change their overall reputation. It seems this scandal may be behind them in the near future as we move toward the vehicles and engines that aren’t causing emissions from their exhaust systems that are much greater than they should be.
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