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Standalone sites are key to VW van centre profits

A separate van network is helping to ensure the profitability of Volkswagen Commercial Vehicles.

Dealers’ margins may have reduced, but Simon Elliott, UK managing director of Volkswagen Commercial Vehicles, said profits were being closely monitored.

Retailers should also benefit from growing market share – VW Commercial Vehicles’ share last year was 7.9% with 30,427 registrations; as of October this year it was 8.5% with 24,952 sales.

“Our commercial vehicle dealers are making a profit. This is because they are absolutely focused on commercial vehicles,” said Elliott.

“We have revisited our strategy and decided to have standalone van centres because they make more money next to a car dealer.”

Elliott does not foresee a reduction in dealer numbers next year, although he is cautious about opening more.

The company has 65 commercial vehicle dealers and has identified 11 areas in the UK where it doesn’t have a site. But it will only add to this number if it does not affect the existing network.

“We don’t foresee closing any dealerships next year. We have dealers making a profit. Significant support with good two-way communication, I believe, means we have excellent support both ways,” Elliott said.

“We would like to expand the network but need to do it when it is viable.”

Dealers are being supported through new vehicle stocking and programmes to drive sales traffic. Elliott cites as examples a leasing and service programme, and 0% finance on used vans.

Forecasting what will happen to the market next year is difficult, but Elliott predicted a “tough” and declining commercial vehicle market.

Nevertheless, he felt VW was in good shape to grow its market share in 2009. He aims to achieve this without over-supplying dealers with stock, by monitoring the market and using a bank of forward orders.

Elliott said large fleets were talking to VW about increasing their volumes because the manufacturer was protecting the brand and residual values by not promoting 0% finance and other “stressed advertising” on new vans.

“Three-quarters of orders to pay 0% finance does not necessarily help the brand. I think by taking this line it will help us next year.”

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