Volkswagen explores new sales model for electric models in China

A new logo of German carmaker Volkswagen is unveiled at the VW headquarters in Wolfsburg, Germany

Volkswagen AG is launching another sales model in China that will see the automaker open showrooms in city centres for electric vehicles (EV) and offer fixed prices, departing from the conventional sales system used by the wider industry.

Last week, Volkswagen’s joint venture with SAIC Motor opened its first showroom under this system in the eastern city of Hangzhou, according to a social media post. The store, named “ID. Store X”, sells its ID. range of family cars.

The German automaker said on Wednesday that customers can order vehicles at a fixed price directly through the company website, phone app or from authorised dealers. The stores are invested and operated by selected dealers, not the automaker.

The dealers get a commission from vehicle sales and do not need to maintain the car inventory, Volkswagen said.

Traditionally automakers including Volkswagen, General Motors and Toyota Motor set the official price, but dealers are expected to keep an inventory of vehicles and often allowed to offer discounts or price them higher depending on the demand for the models.

The German automaker’s new attempt still differs from Tesla Inc’s direct sales model that bypasses dealers entirely. Tesla’s model allows the U.S. carmaker to manage the process from production to pricing to sales to delivery while adding operational costs of running the wholly-owned stores.

Showroom strength is becoming an important differentiator for EV makers in the world’s biggest auto market, as they line up model launches. Tesla currently has over 150 showrooms and service centres in China while Nio Inc has 189 stores. Xpeng Inc has 116 and Li Auto Inc has 45 showrooms, as of end of September.

SAIC-Volkswagen said it would open 40 ID. Store X stores in 29 Chinese cities in the next 1/1-2 years. Volkswagen’s other venture with FAW Group has yet to announce a detailed sales plan for EVs.

Volkswagen said last month that it will launch eight ID. family models in China by 2023 with its local partners SAIC and FAW.

Sales of electric, plug-in hybrid and hydrogen-powered vehicles in China are forecast to rise to 20% of new car sales by 2025 from just 5% now, the State Council said last month.

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