December 20, 2024
By Barrie Charapp Beaty
Charapp & Weiss, LLP
bbeaty@cwattorneys.com
At the end of November, Volkswagen dealers received a special message from Volkswagen regarding the ID. Buzz. The most important part of that message was at the bottom which stated:
"However, we want to address a concerning issue: ‘some’ dealers may be marking up the ID. Buzz by thousands of dollars above MSRP.
"We strongly discourage this practice. Such actions are short-sighted, damage both your reputation and the brand’s image, and contradicts our principle of Customer Obsession, turning a positive experience into a negative one."
This article covers what is on every Volkswagen dealers’ minds when reading the special message: What is the benefit for the dealers’ selling that ID. Buzz at MSRP?
DEALERS’ BENEFIT TO SELLING THE ID. BUZZ AT MSRP
While automotive manufacturers are legally able to suggest a resale price to their dealerships, dealerships are not legally required to follow those suggestions and any manufacturer implemented consequences for failing to follow such suggestions, can be viewed a violating antitrust laws. Even so, it appears that most motor vehicle advertisements these days are being sold at MSRP or less due to dealers needing to move their inventory. Therefore, selling the ID. Buzz at MSRP would not be out of line with a dealer’s desire to move inventory. Additionally, customers like vehicles sold at MSRP so dealers receive customer satisfaction for doing so.
However, the biggest benefit for selling at MSRP is actually unrelated to the ID. Buzz itself… it has to do with the possibility of future litigation that dealers may have with Volkswagen due to Scout. As most Volkswagen dealers are aware, Volkswagen is attempting to skirt the franchise system through Scout, a wholly-owned subsidiary of Volkswagen, in order to sell electric vehicles directly from the manufacturer to consumers, thereby circumventing its dealer body. If Volkswagen sticks with that plan, inevitably it will be fighting its dealer body (and probably various associations) around the nation on franchise laws. The last argument dealers want to give Volkswagen in those actions is that dealers marked up vehicle pricing to the consumers despite being asked not to (i.e. as with the ID. Buzz), and therefore, manufacturer direct sales is best for the consumer. As most of us in the industry know, direct to the consumer sales has various markups hidden in the pricing and lacks the transparency and competition needed to keep costs low to the consumer. However, the decision makers for these cases are often not familiar with the interworking of how motor vehicle franchise pricing and actions work and will take such an argument by Volkswagen on its face. Selling the ID. Buzz at MSRP would remove such an argument from Volkswagen.