Dealers Clay Cooley and Jason Kuhn are contrarians: They have been buying Volkswagen dealerships despite the company's slumping sales and its ongoing scandal over diesel-emissions cheating.
Cooley, who owns Clay Cooley Auto Group in Dallas, bought two Volkswagen stores last month.
Kuhn, president of Kuhn Automotive Group of Tampa, Fla., which already owned two VW stores, bought another in Atlanta in January 2015 and will break ground in “a few months” for a VW store in Columbus, Ohio, aiming to open it in the second quarter of 2017.
And they're not done. Each dealer wants to own more VW stores, even as buy-sell advisers have downgraded the value of the brand's stores to practically nothing.
“The pendulum has swung too far,” Kuhn said. “Valuations for VW stores have come down to a point where they are a screaming 'buy' for us.”
Kuhn admits: “Volkswagen has work to do to get past the financial issues caused by this crisis, repairing U.S. consumers' perception of the brand and to rectify the damage done to the brand by the diesel fraud. It won't be easy.”
But he believes VW will do exactly that, which is why he's willing to “take the risk to continue to invest our money behind the VW name.”
That risk is mitigated by the fact that Cooley and Kuhn can look beyond new-car sales to make a living. Both are known for their used-car sales savvy — used vehicles outsold new ones 2-to-1 at one of Kuhn's VW stores last year, for example — and strong service businesses. They view VW stores as moneymakers in those areas until the brand fixes its problems and its new-vehicle sales rebound.
VW's diesel-emissions scandal erupted in September. Some 580,000 U.S. vehicles have been identified as having been equipped with “defeat devices” that allow them to pass laboratory emissions tests despite exceeding federal standards when they are driven on roads.
The scandal has made many VW stores difficult to sell. Many dealers worry about the financial impact the scandal will have on VW and the ding to its image. VW brand's new-vehicle U.S. sales through March slumped 13 percent in a light-vehicle market that rose 3.3 percent. In 2015, VW's sales slid 4.8 percent against a 5.7 percent market gain.