The electric revolution is with us and this week we got a glimpse of just how much it is going to change not only the way we drive and use our automobiles, but also the way we do business with big car companies.
Following on from the incredibly damaging ‘dieselgate’ scandal – incredibly, five years ago now – which not only caused lasting reputational damage for the giant Wolfsburg concern, but also cost billions in fines and reparations, Volkswagen pressed the re-set button.
Re-inventing yourself from being the world’s biggest maker of ‘people’s cars’ (the clue is in the company name) which had for eons existed thanks to the internal combustion engine – be it either in petrol or diesel formats – VW went all-in on electric, announcing that it was going to become the world’s biggest maker of electric cars within a decade.
Such a drastic change of tack led to a lot of soul-searching both within the company itself and also among its millions of dedicated customers globally. It has also afforded VW the chance to radically redefine how it interacts with its customers and will, in due course, allow the company to change the relationship customers have with it.
The ID generation – the electric thrust by VW will be defined by the ID nomenclature, thus giving it an easily identifiable character – will kick off that era of change and the ID 3 is the first iteration electric car to roll off the new production line in the company’s Dresden plant; it will usher in a new age of car making, car buying and car using.
Although the prices for the three ID 3 variants were unveiled last week – with the purchase cost varying from €33,625 up to €47,545 depending on specification – this week we got more of an overview from Volkswagen about how they are going to market and sell their new electric baby.
Although we have not yet actually got to test the car in any of its guises, VW tell us there will be three battery variants: one with 45 kWh and a 330 km range; a second with 58 kWh and a 420 km range; and, a third with 77 kWh and a 550 km range.
So far so good. They have produced a car with a workable range – unlike so many of the pasty efforts we have seen thus far from a majority of manufacturers – at a price comparable with so many internal combustion engined cars and with a hugely attractive array of technology on offer aimed at providing clean, affordable motoring for the masses.
But, as we have seen in recent years with the advent particularly of PCP purchasing options, the car companies don’t just want your business for one car only – they want you for life. We have seen this phenomenon accelerate in recent years whereby a customer walks into a showroom, sings up for a PCP plan for a fixed sum per month and they drive off in a new car.
However, there are generally three elements to such a finance deal; with one you pay an agreed sum in the shape of a deposit (typically 10 to 30% of the purchase price); then you pay a fixed sum over 36 months; and, finally, you either pay what is known as the guaranteed minimum value of the car at that point and you own it.
Alternatively, you can enter a new PCP and simply step into a new car or you return the car and owe no further money, provided you have not over-stepped various criteria – mileage etc. – agreed at the beginning of the arrangement
It has turned out that many consumers are happy, once their contract has run out, simply renew and get into a new car from the same company.
With the ID 3 and future ID models, VW are hoping to take this a further step forward by providing you with a product you love and adore and which you will want more of when the time comes. VW says that this whole game-changing ideology was first seen by PCP punters as “the start of a game-changing total cost of ownership” regime.
With the ID, VW plan to take this a step further with the idea that once people get used to this whole new way of doing business, they will stick with whichever company got them involved in the first place. VW aims to be that company.
“The next step is the ID plan,” VW says, “where everything is in one place and we are now moving towards this.”
By incorporating incentives to allow people install charging facilities at their homes, giving punters a choice of low-cost maintenance plans and offering – initially anyway – a guaranteed 50% of value after 36 months and a zero deposit requirement, VW hopes to attract people to their way of thinking and their cars.
Those who get in on the act initially – the VW ‘First Movers’ scheme will be available to those who order their ID 3 before the middle of next month – will also be offered such as the first three monthly payments free of charge, a Wallbox installation contribution of up to €1,000 and free 36 months of servicing. So, the enticements are there and are very real.
The first of the cars will arrive in Ireland in September and VW here is already estimating that it will sell between five and six hundred of them by the end of the year. It is a little unsure what 2021 will hold as the expectation is that demand across Europe will surge, limiting Ireland’s potential supplies.
Undoubtedly the move to the ID regime is a very big thing for VW and the company wants to have everything in place as the electric revolution gets into full swing, so that it can maximise sales and, hopefully, hold onto a substantial percentage of buyers for a much longer period than might previously have been envisaged.
It is indeed a whole new world for car companies and their customers but, as is ever the case, only time will tell how the manufacturers’ plans pan out.
But, from an initial perusal of what they hope to achieve, it would appear that their ambitious plans have a considerable chance of success and that the days of haggling with you dealer over the price of a new and second-hand car may well be behind us.
While VW may be in the vanguard here, have no doubt that others are following close behind.
Welcome to the new normal.