Volkswagen dealers in the US now see a brighter future

Article by Andrew Christian, on February 13, 2015

Volkswagen’s dealers in the United States had been pressed by the way the German carmaker try to achieve its goal of selling 800,000 vehicles annually in the country by 2018. Volkswagen remains committed with that sales goal and its dealers are now feeling more positive about reaching that target, no matter how ambitious that sounds.

Well, Volkswagen has been showing signs that dealers alone won’t have to carry the burden of hitting the sales target. In fact, the German carmaker has told its retailers at the National Automobile Dealers Association convention in January that increasing dealership profitability would be more important than achieving the 2018 sales target.

Missing the current crossover boom, VW vowed in January to introduced two new North America-built crossovers to dealerships in 2017, and at least a third crossover is on the drawing board. The German carmaker is planning to 100 dealerships to its US network by 2019, in markets without any VW retailers. Most of these new dealerships will be open after the new crossovers arrive.

The January announcements followed a slew of other changes that have made US dealers become more positive of their situation in the country since Michael Horn was named as chief of Volkswagen Group of America over a year ago. For instance, VW announced in 2014 that it would shorten the life cycles of its products to closely match purchase patterns in the US.

Likewise, the German carmaker established new local marketing associations that would allow dealers to have a bigger say in ad campaigns and promotions. Also, VW is recruiting 200 engineers to man its r&d center in Chattanooga as it bids to strengthen its US-product planning operations.

Before Horn became in charge of the helm in the US, VW’s strategy centered on achieving the 800,000 sales target -- pressing dealers to have big-budget showrooms and leaning on stair-step incentive programs to boost up sales.

Dealers were not happy about that as the program eats up profits and pitted them against one another. [source: automotive news - sub. required]

Topics: vw, united states, dealer

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