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Volkswagen will reduce the number of its dealer-partners in India to 50 from 60. With this move, the German carmaker seeks to improve its profitability.
However, Volkswagen is encouraging its present dealer-partners to launch more outlets to increase sales, leverage economies of scale and improve profitability.
Steffen Knapp, Head of Volkswagen Passenger Cars, said, “The larger dealers can better leverage economies of scale and are generally more profitable. We are going for less investors (dealers). When I started (three years ago in June 2017), we had 84 investors, we currently have 60 and we will go down to 50.”
The company is also encouraging its dealers to buy out the businesses of their fellow dealers within the same geographies whenever an opportunity comes.
“Our big (dealer) partners are absolutely profitable. Even today, a Volkswagen dealer on average is earning more money than a Maruti dealer. Because we are selling high-ticket items, the turnover per car is much higher,” Knapp stated.
Volkswagen is also eyeing to increase the number of customer touchpoints to 150 from 132 at present by the end of 2019.
