Volkswagen Group is to sell its new cars from all its brands – Volkswagen Cars, Skoda, Seat, Cupra, Audi and Volkswagen Commercial Vehicles – directly to Irish customers from June 2026 in a move that will see its retailers become responsible for new car handovers rather than the sales process.
The German car giant is using Ireland as a test bed for this new sales model.
What does it mean?
VW says buyers across all its brands can either choose and purchase their new car entirely online or go to a dealership to kick the tyres. But even then, if they sign on the dotted line in the showroom, the actual transaction will be done directly with the German car giant rather than the dealer.
VW Group will not only control the new car sales transaction, it will also set the initial valuation on your trade-in car if that is part of the deal.
One Ballsbridge review: Can Oliver Dunne break the curse of this Dublin 4 dining room?
Why are we getting condensation on our new triple-glazed windows?
100 great restaurants, cafes and places to eat in Ireland 2024
I had my kids in my mid-20s, which was unheard of among women of my class and generation
It ultimately leaves the dealers with handover duties and service/repair work.
How does the new sales model differ from the current one?
Under the current franchised model, dealers are independent businesses, buying their stock of new cars at wholesale prices from importers, who bring them in to the State from the various factories. Some of those importers are themselves independent, locally owned companies. Others are local offices of those car makers.
Having bought their stock of new cars, the dealers then sell them on to the consumer, adding on a profit margin. That profit margin can often be used to offer consumers a discount.
Under an agency set-up, dealers no longer buys their stock of new cars from the car maker, and the customer is now buying the car directly from the company that made it. The dealer is now an agent, doing the physical handover of the car for a flat fee rather than a variable profit margin.
Are others moving to this agency model?
Yes. Tesla has long operated outside the franchised dealer model, as has Polestar. BMW has said it will go adopt the agency model for all its sales by 2026.
Stellantis, the group that owns the Peugeot, Opel, Citroën, Fiat and Jeep brands, also plans to move its European sales operations to the agency model by 2027.
However, others such as Toyota, Hyundai, and Mercedes have said they are sticking with the franchised dealer model.
What does it mean for dealers?
The Irish Times understands that Irish dealers who operate 112 outlets across the group’s brands were informed last Monday that their contracts were being terminated and that new contracts would be issued, introducing the new agency sales model from June 2026.
VW Group Ireland has yet to indicate how many of its current dealers will be offered the new contracts and how much it will pay dealers for managing the handover of new cars to customers.
Why are the car companies doing it?
Consumers seem eager to buy online – even for cars – and surveys show they dislike the haggling process that has long been a feature of car buying.
Meanwhile, the car makers want better control of the transaction and to reduce the power of the middleman dealer. They already provide finance through their banking arms so they will now control the whole process from factory to your driveway. They may well look to add insurance to the mix in the future; they do it in other markets.
Is it good or bad for the consumer?
In theory, the agency model brings greater transparency and simplicity to the deal. However, with little room for haggling, it also means you have less chance of securing a bargain. There is the possibility of higher prices and less opportunity to shop around.