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Insight: Volkswagen Group

“We have some retailers achieving 100% right first time fix through a really diligent approach to the process,” said Thomas.

Thomas said the UK motor retail industry has changed in the last 10 years, with the brands’ retail networks becoming more professional, adopting systems and processes to achieve consistency, and collaborating to share skills and best practice.

The business has a focus on market share performance, employee satisfaction and customer satisfaction.

All are vital elements in achieving its ambitions for market share growth and for all its brands to be top quartile performers for customer experience.

Loyalty drives rewards

That is linked in with dealer profitability. “I keep stressing that the rewards for retailers from looking after the customer and driving forward loyalty are a lot more significant than the margins rewarding performance.

"But often retailers are chasing manufacturers’ rewards and KPIs and that’s not the real prize. Thankfully a lot of our retailers get that. All our initiatives and KPIs point at the way to go.”

“We can’t make the business grow if we don’t look after customers. We’ve grown significantly in the UK and conquested a lot of customers, so it’s very important we keep them.”

He talked about the bottom 10% of retailers – those who don’t perform on customer experience or market penetration and won’t show improvement.

These can put the franchise in jeopardy for the 90% who are performing, he said, so need addressing in order to protect the investments and efforts of the other dealers.

If their individual relationship with the manufacturer is questionable, it is right for that relationship to end – Thomas sees a small level of churn in the networks as healthy in allowing new talent to join the franchises.

A perception of its brands and networks is that all are strongly managed. The franchises are highly valued – even Skoda and Seat are now joining the portfolios of the industry’s big guns.

“I know the business model is working because the franchise is working as a whole,” he added.

Unlike some volume brands, Volkswagen Group UK has not issued notice of termination to its networks.

Thomas said such moves can be destructive, and will make people feel vulnerable at a time when car retailers are looking for support.

“If we didn’t have good relationships with the networks and were unable to convince them to invest in the brand and business model then the Block Exemption opportunity might be something to grasp.

Some brands have changed or terminated contracts.

We’re not doing that. We’re giving our retailers stability, and not terminating contracts, but we’ll be looking for the dealer base to make the right investment for the opportunity the franchise gives them.”

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