VW dealers are not backing down saying “No more compromise. We’ve come to a dead end.”

The biggest dealer, Klasseauto, and Autoplatz located in Songpa, Seoul, and Bundang and Anyang, Gyeonggi are in a head-to-head discount war, offering extraordinary terms, such as life-long free maintenance service for engine oil changes, not only to new car buyer, but also his relatives and references.

This month, Autoplatz is offering expireless coupons for oil changes to new car purchaser and his families and references.

Not to be outdone by Autoplatz’s extravagant offers, the biggest VW dealer, Klasseauto, has matched the same incentives.

By the end of this month, Klasseauto’s outlets in the Gangnam area of Seoul, including Sinsa, Apgujeong, and Yeoksam, as well as Suwon and Ilsan in Gyeonggi Province, are presenting ‘a life-long coupon book for free oil changes’ to buyers of VW cars and the references.

The prices of engine oils for VW cars vary by model, but if 200 thousand won is considered the average, the free life-long oil changes will amount to about 1.5 to 2 million won.

This incentive is an add-on to discount offered by model that was provided by all dealers. Therefore, car owners are taking advantage of these generous offers by Autoplatz and Klasseauto.

Both dealers’ offerings of life-long coupons for free oil changes have not opposed by VW Korea or VW Financial Service Korea.

As the two dealers are engaged in such aggressive marketing, other dealers like Meister in Gangnam and GS mbiz in Gangseo appear to be uncomfortable.

In response, Meister, GS mbiz, and any other dealers are complaining that “In order to prevent consumers from moving to those two dealers, we have no choice but to offer the same incentives, and the ultimate burden will be inflicted on dealers and salesmen.”

VW’s dealers were in the red last year, Klasseauto by 2.8 billion won, while Autoplatz was at 2.2 billion, and GS mbiz, 160 million won.

Due to such fiercer competition among dealers since last year, the three dealers in Seoul, except for Meister, were in the red.

Therefore, the VW dealers gathered early this year to agree to refrain from engaging in such cut-throat competition that they view as leading to their mutual demise. However, since April of this year, the companies appear to have reverted back to their wily ways.

The reason why VW dealers are competing for losses is due to the excessively ambitious targets alloted each dealer in order to achieve goals determined by the head office, which is based on their marketing strategy of small profits and quick returns.

VW Korea’s dealers have the lowest level of dealer premiums at 9-10% compared with other import dealers in Korea.

Accordingly, they are required to increase sales volumes for larger profits, and thus the competitive discount offerings are viewed as the means to increase sales.

In spite of their struggling, VW Korea achieved an operating profit of 40.7 billion won and 31.2 billion in net profit, while VW Financial Service Korea, an affiliate of VW’s finance company and a loaner for dealers, registered 8.2 billion in net profit.

VW Korea, until May of this year, sold 12,358 units of cars, up 34.2% over last year, and are expected to register larger profits this year, along with VW Financial Service Korea’s increasing profits.