Hit by its emission-scandal, Volkswagen is lagging behind in the global automobile market, while auto sales are encouraging picking up mostly in the US.
The German auto giant is facing adverse conditions in the automobile market globally after the emission norms scandal broke. The company is struggling to get back angry dealers to business mode to prevent further loss.
About 650 dealers of Volkswagen are stuck with business as sales of Volkswagen hit globally after the scandal. As part of its sales revival strategy, Volkswagen is encouraging dealers to offer pre-scandal prices.
Whenever any technical snag arises, it's dealers who have to face customers and convince them to keep up the goodwill of the company.
Volkswagen has already sold 500,000 cars in the US marketing them as 'clean diesel,' but nitrogen level of these vehicles turned out to be 40 times more than the allowed emission by the US Environment standards.
Adding to further woes to Volkswagen, the US regulators last week identified some new models also involved with emission scandal. Volkswagen has also admitted that the problem involves 800,000 cars including gasoline models as well.
Volkswagen is offering additional incentives to dealers and consumers for gasoline-powered 2016 models, which are still on sale. The discounts range from $2,248 to $4,192 depending upon models including Audi sport utility vehicles, according to AutoDataCorp.
With an exception to Volkswagen, the US automakers are riding high on surging auto sales in September and October. Indicating the highest growth since July 2005, the auto sales in the US market reached to 18.17 million units in September alone. Overall automobile industry sales were up 16 percent, according to Autodata.
Embroiled in an emission scandal, Volkswagen is missing the great market opportunity. It's estimated that Volkswagen recorded a meager one percent rise in sales.
Since the scandal came to light on 18 September 2015, Volkswagen sales plunged globally. Moreover, the German automaker is prohibited from selling 4-Cylinder diesel cars until it replaces its cheating emission software and gets approval from the regulators.
Volkswagen has announced that it would recall and repair all the vehicles and this massive work is expected to commence from next year onwards.
Automobile industry analysts question that how's Volkswagen going to address several issues involving with customers, dealers and regulators. No one knows how much time it take bring the situation back to normal.
Volkswagen may have to cough up $18billion in the form of fine in the US alone. There's also plan to buy back cars. Several questions are making rounds like how many cars, will it buyback and what's time frame? There's no information available from the company.
Steve Kalafer, chairman of the Flemington Car & Truck Country family of dealerships in New Jersey, called it a "massive fraud. "
If our employees deceived Volkswagen in the warranty repair of a vehicle or if a salesman claimed an incentive they weren't entitled to, VW would have the right and probably would terminate our business relationship with them without any compensation. If we did it, we would lose our business. And, if it were a large enough fraud, presumably they would turn it over to the local prosecutor", he added.
Michelle Krebs, an analyst with Autotrader.com, an online auto dealer marketplace, suggested that Volkswagen should keep the "dealers on board, afloat and as happy as they can".
"The dealers are going to be on the front line whenever there's a fix for this problem. Dealers are absolutely critical when these bad things happen", she said.
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