Spotlight: Volkswagen Commercial Vehicles

Could 2014 have gone any better for Volkswagen Commercial Vehicles? Registrations up almost 10% on 2013 to a new record high of 40,238, consolidation as the second biggest selling vanmaker in the UK and a record order take, up 38% compared with 2012.

Add in passenger car derivatives and the sales total increased to 44,297. And all this was achieved without any major product launches over the 12 months.

Yes, there were new derivatives: Transporter BlueMotion gave fleets the choice of a 153g/km emissions stop-start model, which claims up to an 850-mile range on a single tank for less than £20,000 excl VAT, while two limited edition Amaroks gave the pick-up a pick-me-up in mid-life. But the core of the proposition remained unchanged.

However, taking the gloss off a successful year was the fact the market as a whole increased by almost 19%, which resulted in an overall share slip for Volkswagen Commercial Vehicles from 13.62% to 12.51%.

According to managing director Carl zu Dohna, there was a good reason for this: “We couldn’t get enough of the product we wanted due to worldwide demand.”

Supply shortages were greatest for the Caddy – the only model not to register a year-on-year rise in sales – and the Transporter.

“If we had more supply, we would’ve sold more units,” Dohna says, without hesitation. Colleagues suggest “more units” would have seen Volkswagen Commercial Vehicles outstrip the market.

Volumes have been freed-up for 2015 after the company increased production capacity as a short-term solution.

Longer-term, it has started work on a new production plant in Poland which will begin assembling the next  generation Crafter in the second half of 2016. Consequently, supply times this year should not extend beyond a “worst case” scenario of 12 weeks – last year it extended well beyond that.

Underpinning Volkswagen’s recent success is a dedicated van network of 71 centres and 24 authorised repairers.

“It is important for our customers because their demands are different to car customers. It is absolutely necessary that we can serve and sell to them with our dedicated sites and CV staff,” Dohna says.

To this end, Volkswagen Commercial Vehicles will be answering calls for extended opening hours by introducing Saturday aftersales servicing later this year across the  retail network.

Volkswagen Commercial Vehicles head of sales Andy Waite says: “We have a number of centres that already extend into the evenings. Long-term, we see them stretching in all directions: Saturdays and evenings.

“Customers want the flexibility so we see that as an evolution of our van centres.”

Last year the vanmaker launched a service promise, after consulting with fleet managers.

It included 10 promises, which head of customer quality and network development Kevin Rendell calls “the basic building blocks for every customer, every time they come to us”.

Promises include a pledge to replace, like-for-like, any vehicle that is off-road for more than two hours, if it is under warranty. In addition to this, there is a commitment to  diagnose any vehicle within one day if it cannot be fixed at the roadside.

“As we move through the year, we will bring this time down to 12 hours, six hours, as we evolve the promises,” Rendell says.

It’s notable that Volkswagen’s roadside assistance programme achieves a 95% fixed-at-roadside rate, with 82% of fixes permanent within a 44-minute average response time.

The service promise is all part of the strategy to raise customer satisfaction levels, following the introduction of the ‘working for you’ brand promise in 2013. Volkswagen’s CSI index has risen from 81% before the programme launched to almost 90% in 2014.

Dealer incentives include the ‘every moment matters’ programme – new in 2014 – which recognises and rewards good ideas, while a mentoring scheme for SMEs saw 500 companies bid for a place, with 10 offered a month’s coaching to help them improve the way they ran their vehicles.

The dedicated commercial vehicle staff also received coaching and training for both sales and aftersales last year. The focus on service will continue throughout 2015.

Structural changes within Volkswagen Commercial  Vehicles have seen the appointment of a contract hire and leasing manager plus key account managers to ensure the vanmaker is able to offer the right solutions to fleet customers – irrespective of size. Dohna says: “A customer with two vans is as important as one buying 500 vans; this is our focus.”

Volkswagen Commercial Vehicles is also working more collaboratively with other brands within the group, both car and truck, to “enable us to talk to customers on a group bias with group solutions, rather than individually,” Waite says.

It comes on the back of the work carried out by former Volkswagen cars head of fleet Vince Kinner over the past couple of years (see panel below).

Waite explains: “This will help us to balance where our growth comes from – true fleet and SME. It is easy to grow just focusing on super fleets, but that is not sustainable and it does not offer long-term profit opportunities for our dealer network.”

New Caddy and Transporter

Last year may have been a quiet one for new products – ironically, as almost every competitor refreshed its model line-ups – but launch planners will be busy in 2015 as Volkswagen brings the new Caddy and Transporter to market, followed by a new Crafter in 2016 and facelifted Amarok.

It will also seek to capitalise on the success of the two limited edition Amaroks introduced last year by rolling out the strategy to other vans. Specials appeal in particular to SMEs and owner-drivers who want to stand out and who often use pick-ups for private purposes as well as business.

More products are also expected to be launched under the ‘engineered to grow’ umbrella after Volkswagen added a Luton-bodied vehicle at the end of last year alongside the existing dropside and tipper variants.

It expects to sell quite a few conversions on the Crafter chassis, as part of a pledge to have more vehicles available for an immediate-need purchase. A refrigerated body is believed to be under consideration for 2015.

Despite being the final year of the current Caddy and Transporter, both still have class-leading residual values, according to Dohna. This is key for the business, as it keeps a lid on total cost of ownership.

“Residual values are crucial. We need to keep them stable; it gives us an advantage in the market,” Dohna says.

“We sell vehicles through profitable channels, and we don’t dump volume in the market. We do no strange business or high discounts just to get rid of vans – it’s crucial to protect residuals.”

And while most would judge excess rental registrations as being the main activity to avoid, Dohna is also wary of excessive sales via leasing companies.

“We have to be careful with the numbers here,” he says. “We offer our own finance through VWFS to take a proportion of the business.

“It is important that we give a good service so they come back to our van centres.”

He is in the latter stages of developing an extended warranty to help encourage fleets to stay within the franchised network. It will be launched at the end of the year and could be lengthened to five years.

Dohna cuts a cautious figure when forecasting total van sales in 2015. He believes the market is likely to remain flat.

However, Volkswagen Commercial Vehicles is looking for growth, “possibly at the levels of 2014” he says, while stressing that the company does not publicly announce  fixed targets.

He adds: “2015 is an important year for us, because we are changing 75% of our model range by volume. It is an exciting time for the company.”

Telematics Innovation

Volkswagen Commercial Vehicles is launching a telematics product this month in association with the RAC, which can be offered as a white label system for any make and model of van and car.

The system creates  a driver scoring  matrix based on the  usual performance  measurements of  fuel efficiency and  acceleration/braking/cornering, but also enables remote vehicle diagnostics, HMRC-compliant mileage recording, location tracking and geo-fencing, all for a standard monthly charge of £12.50 (exc.  VAT) per vehicle for a 36-month contract.

Data can be viewed on a customised mobile/tablet friendly dashboard.

Volkswagen Commercial Vehicles believes the telematics solution – which will be offered via Volkswagen Group Leasing and includes a 24/7 support line – will be of greatest interest to smaller fleets.