FRANKFURT - After cutting the number of Volkswagen and Audi outlets in Europe from 8,300 to 7,800 since 1996, VW says the total will remain stable for a few years.
The remaining dealers are investing an average of DM1 million ($550,000) to refurbish their stores.
Some will spend much more. Autohaus Lang, a large VW and Audi Center in Stuttgart will invest DM40 million.
'A wave of investment has began,' said Robert Buechelhofer, VW management board member in charge of sales. He said dealers will invest DM5 billion in total.
The restructuring, known as 'Idealnetzplan 2000,' is aimed at separating VW and Audi brands, reducing sales points and raising dealer profitability.
The average VW/Audi dealer now sells 300-400 cars a year. The average profit margin is 1.5 percent.
VW wants average sales of 500 cars by 2000 and margins of 3 percent or more by 2003.
In December 1995, contracts were cancelled for 600 dealerships and service centers.
'It was done using a lawn-mower principle,' said Juergen Niebling, a lawyer for three German dealers who have challenged VW. 'The motivation was to regain control over prices by reducing competition between the dealers.'
Most dealers accepted the termination. VW offered to pay 7.2 percent of the average annual revenue of the last three years.