By Alysha Webb, Editor and Publisher
Hinrich J. Woebcken, CEO of the North American Region for the Volkswagen brand, says its dealers in North America will have more say in the future in the development of the models they must sell to consumers here. That could add value to Volkswagen franchises, say buy sell professionals. But Volkswagen must reciprocate with high-quality vehicles and more transparency.
“If true, this will be very valuable to VW dealers,” James Taylor, managing director at The Presidio Group, tells Automotive Buys Sell Report. “The Japanese and Korean manufacturers began to get substantial traction in the US market after they began to use content and styling directed by US-based associates.”
Hinrich J. Woebcken, CEO
Woebcken, who is also president and CEO of Volkswagen Group America Inc., says U.S. leaders and engineers will have more autonomy going forward. This will allow them to “act quickly on dealer input and customer demand,” and they will lead the development of U.S. products, he says.
The VW executive was speaking at the 2016 AutoConference LA on November 15. The conference, held just before the Los Angeles Auto Show, was sponsored by J.D. Power and NADA. Hired in January of this year, Woebcken previously worked at Tier 1 suppliers and other automakers, including BMW, but not Volkswagen.
Volkswagen dealers were hit with a body blow earlier this year when it was revealed Volkswagen AG had used software to falsify diesel emissions. The automaker agreed to pay some $1.85 million each to dealers in compensation for lost sales. It also agreed to buy back some 500,000 vehicles from customers.
Asked by Automotive Buy Sell Report how Volkswagen planned to overcome a perception that it is dishonest, Woebcken says, “Legally we are on a very good path.”
The buy backs and other measures will be carried out in a German-engineering, very professional way, he says.
Product is the other key, says Woebcken. VW must offer vehicles that are emotional, have great performance, and are competitively priced.
“I recognize that the brand was not in the best shape before the diesel crisis,” says Woebcken.
Volkswagen has several hurdles it must overcome to boost the value of its franchise.
Historically, says The Presidio Group’s Taylor, VW dealers have “struggled with below-average product, poor product cycle plans, premium pricing for a volume brand, small national ad budgets, and poor manufacturer relations.”
More dealer input in model planning will be helpful, Mark Johnson, president of MD Johnson, Inc., tells Automotive Buy Sell Report. But Volkswagen must also change the way it allocates models to its dealers, basing the mix on what dealers can sell in the U.S. rather than what the factory wants to ship them.
VW dealers in the U.S. also need more autonomy to decide how to spend their advertising dollars, says Johnson.
The fundamental nature of the dealer-manufacturer relationship also needs to change, he says. “Relations [of dealers] with U.S. manufacturers are so much more transparent,” says Johnson.
The market for VW franchises is showing some improvement, says Taylor.
However, he adds, before deciding now is the time to sell, “VW dealers should probably enjoy the next few months of artificial sales improvements resulting from the owner and dealer incentives.”
