It may have taken 18 straight months of falling sales, but it seems that Volkswagen AG finally got the message in 2014 that its U.S. operation needed more focus to hit its goal of selling 800,000 VW vehicles by 2018.
Michael Horn was named CEO of Volkswagen Group of America and head of the VW brand here last January, putting a seasoned VW executive with deep ties to Wolfsburg at the helm. Since then, the company has committed to producing a new midsize crossover in Chattanooga, launched a redesigned Golf that is raking in awards and retooled its product strategy to reduce its product life cycles from seven to five years while cutting prices and boosting vehicle content.
Those changes should be welcomed by dealers, who have struggled with mounting red ink, says Alan Brown, the new chairman of the Volkswagen National Dealer Advisory Council.
Brown, 42, is general manager of Hendrick Volkswagen Lewisville and along with his partners is investing $21 million in a new dealership, Hendrick Volkswagen Frisco, both in suburban Dallas. He spoke with Staff Reporter Ryan Beene about how VW dealers fared last year and what's on the horizon.
Q. How was 2014 for VW dealers?
A. The network struggled. The blessing of 2014 was that Volkswagen of America, with [CEO] Michael Horn and [COO Mark] McNabb and [Sales Vice President Mark] Barnes -- they were able to get our future redirected so that 2016 and 2017 will put us back on track. Obviously, the current business model of 2014 was hard on a good percentage of the dealer body, and that's part of where I plan to make an impact in 2015.
Why was 2014 so difficult?
We had Toyota, Nissan and Honda come back with a vengeance. We had our 2014 models, which had issues with content and pricing. The immediate change for 2015 was pushing down the price and increasing the content, so we know for sure that 2015 will be better than 2014 because we'll actually be more competitive in those key model segments such as Jetta, Passat and Tiguan.
What's happening in 2016 that will get VW back on track?
We're redesigning the product to be even better on price point and technology. We're getting away from the longer seven- and eight-year cycles.
We're really working to make more decisions in North America rather than having to travel to Germany every time a decision needs to be made about content or redesigns. We're getting more product built in America or Mexico so that the cost factor stays in line.
What makes you confident that those plans will succeed?
I'm confident because Mr. Horn has the support and respect of his colleagues in Wolfsburg. There is no question that he has an understanding of how to navigate and get the problem-solving aspect of the issues here for the United States communicated, processed and approved in Wolfsburg. He has done a phenomenal job accomplishing that.
It appears that the management team in Wolfsburg trusts him, believes in him and fully supports him.
What do you want to accomplish in 2015?
Let me tell you how simple my agenda is, and I've shared this with the leadership team. I want to focus on getting the voice of the dealer from the regional councils. I really want to know what our brothers and sisters in New York are struggling with versus California versus Texas. Getting the true voice of what's happening with individual dealers by region is crucial. I will be putting a lot of emphasis on regional councils gathering the real information from their constituents to identify for each region how much money on the hood of the car is needed to increase volume in those dealerships.
What will that do for dealers?
I want volume to increase. That helps the throughput at those stores, which equals profitability for every dealer making the correct effort at the end of 2015.
Our management team of Horn, Barnes and McNabb worked diligently in 2014, but they juggled several major issues, and I won't say they were fully distracted, but they're human. There's only so much time in the day. Now that we've got all of this heavy lifting in 2014 and our future is so bright in 2016 and 2017, 2015 can be a year of focus and simplicity for them where we can just drill down on how do we sell more 2015 models in North America and get our dealers back to profitability.