How do VW dealerships deal with inventory issues?
I feel like we developed a new sales model as a result.
Prior to that, what would happen is we would have 200 cars sitting on the floor, the customer would walk in and have a variety of cars to choose from.
But now what we do is we sell in our pipeline. So we say, “Here are the cars we have on order, here is what you have to choose.” So instead of the customer going to our physical lots for a particular car, we now basically select it via [the order] pipeline.
Now we say, “Hey, here are the cars we have to choose from. Which one do you prefer? And here’s the approximate time it’ll be here. Let’s lock everything down now and we’ll go from there.” So we’ve seen customer satisfaction increase in our store because customers don’t have that pressure to make a decision on the spot because something is out of stock. I feel like customers feel a bit more in control. But at the same time, the dealers make a bit more profit.
How do you manage the expectations of customers who order a car or buy in the pipeline, in terms of waiting for the vehicle to arrive?
Often what we can do is extend their current lease or in some cases what I have done is sell them another vehicle. Let’s say their lease was up, they didn’t want to renew their lease. I would sell them a new vehicle, then guarantee the trade-in value, minus the miles they put on the vehicle, for the purchase of the one they ordered. We’ve done it a handful of times. For someone who needs a [replacement] car and need it now.
As a dealership we need to be able to shift and pivot at any time and this is one instance where we were able to overcome a customer’s objection that the vehicle may not have the color or equipment we wanted. wanted, but he bought it. , and we gave them a guaranteed exchange minus the miles.
How have VW dealers handled demand for the ID4?
If we had 100 tomorrow, we would sell 100 tomorrow. What we basically tell our customers when they arrive, we’re going to order a vehicle. And as soon as he arrives, you will be the first person we will contact. This vehicle has been difficult, simply because the demand is so high and the production is not. That’s the only hard thing about it for the dealer corps is that we just don’t have them for sale, and if we had them, they would sell.
Guess the dealers pushed to get ID4 production in Chattanooga up and running quickly, then?
Are there any lessons to be learned from the launch of the ID4 for when the brand will start taking orders this year for the ID Buzz microbus?
If there’s anything I think we need to tighten up and tighten up, it’s our ordering system. And I think that’s where we, the VW Dealer Advisory Council, are going to look at the brand and ask: how can we strengthen this ordering system? How can we get better ETAs for our customers’ vehicles? And overall, it will contribute to dealer satisfaction and our customer satisfaction.
This is the biggest request from the dealership group right now to the brand, that we need an effective ETA that we can tell our customers. Here is the one thing I try to tell my employees, my managers and also the brand: “No response” is not good. Updates – whether it’s a good answer or not – the customer feels informed and is more likely to be happy with the transaction. If we don’t have answers, they’re more likely to go to another brand and cancel their order. But I’ve noticed that if we stay in front of the customer and give them updates on where we are, when we are, how we are, usually they’re happy and they stay with our brand.
Production of the Passat has ended and the Arteon will probably not be renewed after its current life cycle. What do you see as long-term prospects for the Jetta? Will he survive?
Look, the Jetta is a great vehicle. As we know, 70% or more of vehicles sold today are SUVs and CUVs. So when you look at that, I think the sedan market in the industry is definitely down, but that’s not the case with the Jetta. The only slowdown we’ve seen with the Jetta is due to the microchip issue. I think the Jetta is definitely one of the vehicles we’re known for. And we always sell them in volume; as soon as we get to a truckload they are gone. The Jetta is a very, very good vehicle for us. I hope it doesn’t go away.
There is still a market for this sedan and sedans in general; I really believe it. It’s a great price leader, it’s great value and it’s a great car.
The Atlas Cross Sport and new Taos are examples of VW’s strategy of offering multiple nameplates in popular segments. How do consumers react? Are these new crossovers taking sales from the Atlas and Tiguan, or are they attracting new customers?
I’m starting to see trades that I’ve never seen before. We definitely try to hit all segments and it definitely works.
Don’t get me wrong: we cross-sell. There are people who were in a Jetta and went to a Taos, or who were in a Tiguan and are now going to an Atlas or an Atlas Cross Sport. We have some of it, but for the most part we see the Atlas, Atlas Cross Sport, Taos; these are all customers who are new to the brand.
VW AG CEO Herbert Diess suggested in an online chat in February that an electric pickup for the brand would be a “good idea.” Is he right ?
I think that’s definitely a good idea. I really do. This is a question we often hear from our customers. I think that’s really what the market is asking for. And a pickup truck is kind of the last segment to possibly hit this electric vehicle market. People want it, they really, really want it. So I will be very happy if we decide to do that.
Many VW dealerships have had levels of profitability during the pandemic that they haven’t seen in decades. Do you think these levels will or can be maintained if microchip and production shortages ease?
Yes. One thing through this whole pandemic I said [Volkswagen Group of America CEO] Scott Keogh, and I’ve also said to my colleagues: there’s one thing we’ve noticed that’s driven this market forward: when you look at car rental companies, we realize that car rental companies will pay more for cars if they need it for. It’s on the brand side. One thing the dealer body has learned is that customers will pay more if we ask them.
It really doesn’t have to be a race to the bottom on the brand side for car rental companies just to increase volume. The same applies on the dealer side. It doesn’t have to be a down stroke to increase the volume. We can still sell volume and maintain record profits. We have a very good brand, a very reliable brand. We have a brand that customers want to promote and customers are willing to pay for, a better brand. Whether the customer is the car rental agency or the customer entering the dealership, the same is true.
What do you see from VW dealerships in terms of sticking to the list price or making market adjustments? Are dealers who exceed the sticker rejected by the factory?
I see some dealers giving it adjusted market values, due to supply and demand. They don’t have any cars coming, so they have to make money from the cars they currently have. There are dealerships out there, they might only have two, three, five, 10 cars, so they have to make money to cover their costs, which is understandable. On the other hand, the customer who trades in his car, he gets the exact same increase in trade-in value, so he can pay it off on the new car, but we also return the favor on the trade-in. So I think it’s kind of a give and take.
The dealer body recognizes that the “S” in the MSRP is “suggested”: it is the manufacturer’s suggested retail price. But dealers must respond to both their customers and market conditions. When supplies are plentiful, they’re likely selling below MSRP; when they are not, the reverse applies.
In terms of pushback, the vibe we get is that as long as it doesn’t affect customer satisfaction and repeat customers, it shouldn’t be a problem. However, it is very hard not to, because at the end of the day, for a rental return on some of the websites where we have to buy vehicles, these cars are selling above MSRP and they have 2 or 3 years.
With inflated values in the used car market, are VW dealers struggling to get certified pre-owned vehicles?
It is certainly still a challenge. We get the vehicles, but consumers are starting to realize that they can take other routes and sell their vehicle for more. So in turn, they come and say to us, “Hey, if you want my car, you’ll pay for it.” So I think the whole market – whether it’s the dealer branding their car, whether it’s the manufacturer removing the incentives, or whether it’s the consumer asking for additional markups on their lease return or trade-ins – I think you see it on all sides of the spectrum. You see it in the consumer who says they want more for their business. You see it from the manufacturer saying they don’t need to offer incentives, and then you see it from the dealership saying they need an adjusted market value.
What are the big issues the Dealer Council is currently working on?
We are working on better and more accurate ETA times for vehicles, as I said earlier, and on communication. We have made giant strides in our position from a communication point of view, from a trust point of view, from a trust point of view, as a retailer or as a brand. We have set up a structure where we have the [National Dealer Advisory Council] and [Regional Dealer Advisory Councils], and sub-committees. The regions report to the sub-committees, and the sub-committees then report to the NDAC, and what we’re doing is allowing the sub-councils to make decisions, and anything that they can’t make decisions about. decision goes to the national council. Since doing that, we’ve really accomplished a lot.