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COMMENT: Discounts, margins, excess capacities

Franz W. Rother is Editor-in-Chief of Automobilwoche

A 10 percent discount is always possible.

In the past, those who are never at a loss for words, who have a strong backbone and who can play people off one another have never had trouble getting at least 10 percent off a new car in the form of cash or vouchers for fuel or specific services.

That is why the 10 percent discount that the mail order firm Quelle now offers for new fifth generation VW Golfs - as long as the cars are ordered via the Internet - is nothing special.

Those who regularly shop around on the Internet know that even more attractive offers can be found there. For example, brand-new Opel Astras are on sale on the Internet for 20 percent below their list price. Last week one website offered me a discount of nearly 40 percent on the Hyundai Accent.

So, why are Volkswagen dealers in Germany so worked up about the Quelle offer? The answer is pretty straightforward: Because it encourages consumers to haggle and further increases the pressure on dealers' profits. In several of the new dealer contracts, which take effect Oct. 1, profit margins have been reduced drastically. The dealers' anger focuses on the mail order firm's managers and on "those traitors" within their own ranks who sell the new VW Golf to Quelle at cost because they still receive a quantity discount, which is granted by the manufacturer for the sales gained.

It is the manufacturer who should be pilloried. He is the one forcing his dealers to use such methods. Working with planned economic strategies, he puts his cars on the market regardless of the demand. This delays price harmonization between European Union countries. And the new dealer contracts, which comply with the new block exemption, are designed so that even the best sales experts have to use all sorts of tricks to make a reasonable profit.

Agents such as Carplus and Carena use this situation to their own advantage. They no longer solely dealt in used cars or re-imports. Now they also sell new vehicles, so-called excess production cars straight from the plant.

Those who are not keen on specific equipment can buy the new VW Touran at a 20 percent discount. Not from Quelle but at the car dealer around the corner.

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