Q&A: VW aims to be the good-value brand

Wolfsburg, Germany. Volkswagen is returning to its roots. The brand's high-volume models should be affordable again in the future. VW sales boss Georg Flandorfer explained the strategy change at Europe's largest automaker in an interview with Automobilwoche's Wolfgang Eschment.

It seems that market pressures have force VW to rethink its premium strategy and that VW will once again focus on offering cars at prices for everyone.

This is not a shift in thinking. This way of thinking has always existed at VW, otherwise we would not be market leaders by a long shot. It has become more of a priority, that is all.

What caused the change?

Everyone was hoping that the economy would recover and that customers would start to invest in cars again. This has not happened. German customers, in particular, count every cent -- today more than ever.

Which role do cost-effective, bottom-of-the-range models play for VW?

An important one. The customer looks at the basic price, specifically in small-car segments. Then he says, 'This is my price category.' Subsequently, he may be prepared to order a bit more additional equipment. Suppliers whose basic prices are too high automatically remove themselves from that shopping list.

How about a inexpensive, basic Polo model?

We might have to think about that.

How quickly?

I don't want to comment. Our current price positioning is definitely appropriate. We will not be the cheap brand in the future but we will remain the good-value brand. However, we have to accept that some of our customers want to spend less money on their cars. A high-volume producer such as VW has to take this into account.

Are you satisfied with the unit sales of the Golf?

The Golf unit sales meet our expectations. With our new price structure we are exactly where we were with our climatic control offer in regard to German unit sales.

Will you reduce Golf prices even further in view of your competitors' discount campaigns?

No, certainly not. The VW dealer association says the new structure is very customer orientated. And we listen to our dealers.

What do you think will your total unit sales be in 2005?

I am sure that we will be able to increase sales further next year with the Fox, Passat and Golf Plus. However, the new Passat and the Passat station wagon will probably only start to make a real difference during their first full sales year, which is 2006.

VW continues to lose market share in China. General Motors and Toyota are planning a major offensive there. Can you stop this trend?

We continue to be No. 1 in China. And we will defend this position. In some cases we underestimated our colleagues' achievements in China. It would be great if we could have that 26 percent market share in Germany. Nevertheless in regard to the selling of cars, we will improve the quality of our appearance in China, specifically through the training of sales personnel. However, we were surprised by the extent of the price battle our competitors started.

Do you have to take part in it?

No, we do not intend to lose any money in China. However, we will not sit back and watch.

Is VW still making profit in China?

Yes, of course.

What are the sales sector's contributions to the ForMotion cost-cutting plan?

It is crucial for the sales sector to stick to our word in regard to planned units sales. Otherwise all cost saving measures will be for nothing.

Can you explain this a bit further?

If, for example our plan is to sell a half million vehicles in Germany this year then we want to reach this target.

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