(Yicai) July 24 -- Volvo Cars, a unit of Zhejiang Geely Holding Group, plans to revamp its dealer appraisals system in China to prioritize customer service over sales targets and will also introduce uniform pricing nationwide after first-half sales fell, Yicai has learned.

The new system is intended to shift dealer incentives to service‑driven commissions from rebate‑driven volume, freeing them up to concentrate on consumer‑focused activities such as needs analysis, brand introduction, and test drives, rather than haggling over prices.

The “one‑price” policy will ensure identical vehicle prices at every dealer across the country, upending the traditional dealership model where the bargaining space created by opaque pricing has historically been one of their main revenue sources.

The shakeup comes as the Swedish carmaker battles to arrest a performance slump in China, the world’s biggest auto market. Sales fell 10 percent to 70,489 vehicles in the six months ended June 30 from a year ago, though the decline narrowed to 3 percent last month.

Traditional automakers have been losing market share in China in recent years, amid a shift toward new energy vehicles, and an increasing number of their dealers have been going out of business. 

Last October, a number of BMW dealerships operated by Singapore-based GA Holdings were facing closure, and in the past two months several Mercedes-Benz authorized dealers run by Hangzhou-based lifestyle services firm BLD-me have had their authorizations pulled.

This has led to concerns for many car owners about their rights relating to maintenance and extended warranty services. It has also added to tensions in the relationship between auto producers and dealers, and more changes to luxury brands’ sales models are expected.

Editor: Tom Litting