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Difficult year for Volkswagen

Volkswagen, which concedes up to a quarter of its 240 dealers are losing money, says 2005 has been a “bloody difficult year”, but believes it has the products to start a recovery.

Paul Willis, UK managing director, says the run-out of several key models has put retail margins under pressure. He points to strong performance in the parts department and workshop, which has pushed returns at the top retailers to more than 2.5%.

“Dealers need a sustained business model to give good customer service,” says Willis. “Our CSI scores have increased and our JD Power results are better in all areas. Dealers are doing a good job.”

He has told the network that the key focus over the coming months is to reduce their cost base by improving efficiencies on variable cost overheads such as customer handling. Willis is keen to get dealers working together, sharing best practice.

“We need our dealers to be making at least 2% by the end of next year and the objective goal is 3%,” he says. “We can help them by bringing competitive-priced models to market, such as the new Passat. We can build marketing programmes around the parts business and advise on the cost base. We can point them in the right direction, but then it’s up to them to do it.”

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