This agency model works as follows: The franchise dealer no longer is the focal point of a new vehicle sale; instead, the customer places an order directly with Volkswagen, whether offline or online, and names a preferred delivery dealer. The price and dealership mark-up or commission is fixed, set by VW, and the preferred dealer is the agent with no sales negotiation responsibility but is simply a test drive, transaction processor and delivery point.
The dealer no longer finances an inventory of vehicles for sale, all floorplan or finance costs are borne by VW and the dealer is offered an attractive lease program for demos and loaners. This is not the future; in many places in Europe the agency model has already arrived.
Daimler was next to introduce the agency model about a year later in the U.K., with other European regions planning to follow.