(Yicai Global) Nov. 5 -- Volvo Group is introducing a new direct sales model to shift the Swedish car giant’s latest plug-in hybrid electric vehicle model in Shanghai to be more in line with the new energy vehicle era, increase brand awareness among consumers and also make the auto more affordable, a dealership insider told Yicai Global.

All nine Volvo distributors have signed up and prices have dropped by CNY135,000 (USD21,087), Yicai Global learned. All dealers must sell the auto at the same price, will earn sales commissions and should not build up inventories, the person said.

Volvo is the first luxury vehicle brand to try direct sales in China after US electric car startup Tesla, a market analyst said. But its direct sales model is not as thorough as Tesla’s and it still needs to rely on its existing distributor system, he added.

The new sales model pays more attention to standard and unified services, rather than just sales performance, a company insider said. Volvo will also set up flagship stores of its own and attract top salesmen with high salaries and low commissions.

“It is a pilot and an upgrade on the previous sales model,” said Qin Peiji, president of Volvo’s China sales company.

Volvo urgently needs to increase the number of EVs in the Chinese market and establish brand awareness before the government subsidies end next year. The direct sales model is not a bad idea, the analyst said. How to mobilize distributors with enough support will be key to making this new sales model work.

Sales of EVs are restricted in Shanghai because there is only a limited number of licenses issued each year. Saying that, Shanghai is the biggest electric car market in China. In the first half, insurance policies for 135,000 EVs were issued in the country, 20 percent of which were in Shanghai, according to Gasgoo.

Editors: Tang Shihua, Kim Taylor