Volkswagen dealers 'don't want to be second-rate' in U.S.
Volkswagen dealers continue to struggle with profitability as they climb back from the diesel emissions crisis and the subsequent buyback and repair of hundreds of thousands of vehicles.
The retailers want to see more diverse incentive programs and more marketing to raise brand awareness in the U.S., dealers said at Volkswagen's NADA Show make meeting.
- Dealer profitability issue lingers.
- Dealers request incentive programs more comparable to domestic automakers.
- Aggressive sales goals will be tough; additional marketing needed.
"The dealers overall don't want to be second-rate players in America," Michael DiFeo, chairman of the Volkswagen National Dealer Advisory Council, said after the meeting. "Volkswagen is one of the largest and most profitable automakers in the world, and it's time that we start behaving that way in America."
Dealers expressed reservations about Volkswagen's aggressive sales growth plans — which include the brand returning to a market share above 5 percent, which it last held in the U.S. in 1970 — and some skepticism that the German brand will support dealers' sales goals with incentives that are competitive with those of domestic brands.
DiFeo said that may be because many Volkswagen dealers have heard promises before.
"Dealers have reservations because they've seen many different management teams before, and they've all said similar things — that they're going to correct the problems, that they have the resources to correct the problems, and things are going to get better. We've heard this before, and I think a lot of the dealers are skeptical of that," DiFeo said.
Hinrich Woebcken, CEO of Volkswagen Group of America, said profitability for the brand's roughly 650 U.S. dealers remains a key concern of the factory. He said VW wants to see dealers in better financial shape as the brand launches a redesign of its bestselling car, the Jetta, this year.
"It's important that the network is coming into a more healthy financial situation themselves. We discussed some very specific measures and initiatives" to improve dealer profitability, Woebcken said without offering details.
"Most important are the growth numbers," he said. "We're up nearly 6 percent in the first two months, and we intend to keep on growing through the remainder of the year, especially as the new Jetta comes available in the second quarter."
Woebcken said he and his management team are aware of the issues facing the dealer network and that it will take time to work through them.
"Both the brand and the dealerships are not through this difficult time yet, but I think everything is set positively. It's a journey — a multiyear journey — to get this brand back to where it belongs ... as a relevant player in the market. We want to bring more consistency in terms of leadership into this market."
Send us a letter
Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.