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Insight: Volkswagen Group

Many motor retailers would consider Simon Thomas as having Nissan running through his veins.

He worked with the Japanese brand for 20 years, leading up to becoming vice president of sales and marketing at Nissan Motor Europe, responsible for 30 countries.

But last autumn, he took over the helm of Volkswagen Group UK, joining its Milton Keynes base to oversee its six brands: Audi, Seat, Skoda, Volkswagen, Volkswagen Commercial Vehicles and its TPS national trade parts operation.

Combined, the brands now account for 19.3% of the UK’s new car sales – selling 40% more cars together than market leader Ford.

It’s an exceptional performance built on the stable foundations of strong products, committed people and robust, profitable retail networks.

And given that more product is constantly coming through, that market domination looks set to continue.

“My number one challenge is to keep the momentum that the team has built,” Thomas told AMe. “There’s nothing broken here; there’s a lot of success, but I need to keep that going.”

The challenges to that momentum are in the industry as a whole and external challenges, rather than isolated to his company, he said.

2012 parity at best

Given the prevailing economic conditions, Thomas shared the view of many motor retailers that forecasting is extremely difficult given the rapid pace of change.

A look through the records showed 2011 was the smallest market for 16 years, and Thomas sees 2012 being at “parity at best”.

The smaller market means a deterioration of profitability, so carmakers and dealers have to meet that challenge and optimise their business.

“Retailer profitability is very high on the agenda, because without our retailers we wouldn’t have a business,” he said.

The group understands that dealers fixed costs are rising and is working with them to identify where other costs can be addressed, such as stocking and demonstrator programmes, with a collaborative, transparent approach.

Thomas sees the aftersales side of the industry as a worry, particularly with the decline of overhead absorption, now down to 60-65%, and independents eating into franchised dealers’ traditional share.

Volkswagen Group UK is working with its networks to bolster that. Key is getting the customer experience right and building loyalty. PCPs, service plans and warranty are all important for driving up retention and profitability, but the experience at the retailer is vital.

In line with the industry adage of ‘first time fix’, dealers have invested in more master technicians per outlet, and 350 apprentices have been recruited to ensure the skills base will be maintained for the future.

Volkswagen also allows the speculative ordering of parts deliveries by master technicians who’ve contacted the customer ahead of their visit in an attempt to pre-diagnose the problem.

More on Page Two

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