How healthy is VW's bottomline and are the cracks showing?

Despite the drama over Diesel-gate, VW actually increased their numbers over the last couple of years to levels that are higher than before the TDI Settlement.

However, at my local VW, I've noticed constant turnover in Management and staffing. The Service Manager there now has only been on the job 6 months and seemed a bit scared when I casually mentioned that this location goes through Service Managers at a fast rate.

Their salespeople also rarely stay long-term. The receptionists are constantly being replaced.

I know there are a multitude of reasons why people quite jobs and move on, but there's got to be an underlying reason for this.

The only people I recognize from the past are the janitorial staff.

The sales guy who sold me the 2015 Passat TDI last year has been promoted to Finance Manager, but other than him it's a whole new cast of characters.

Anyone else seen this type of thing at their dealership?

Bad bosses can show up anywhere.

The VW dealership that built a new facility and opened in our town three years ago is now a Cadillac dealership.

The finances of VW corporate and network dealers are totally unrelated. Dealers are franchises that are owned separately from VW. A dealer's financial performance has nothing to do with VWoA or VW AG. And VW's sales in North America are a relatively small percentage of their worldwide sales. It's an important market, but the company's survival doesn't depend on success in the US. Far from it.

I see the same thing at my local VW dealer, everytime I go there the staff has all changed. There has been several different service managers in the past couple of years and the mechanics appear to have just gotten out of high school.

IndigoBlueWagon said:

The finances of VW corporate and network dealers are totally unrelated. Dealers are franchises that are owned separately from VW. A dealer's financial performance has nothing to do with VWoA or VW AG. And VW's sales in North America are a relatively small percentage of their worldwide sales. It's an important market, but the company's survival doesn't depend on success in the US. Far from it.

Click to expand...

I have to agree on the above. The dealership here that went under just didn't sell enough cars. This area of Texas is pickup truck and Mercedes/BMW country and VW didn't stand a chance here.

I spend as little time as possible hanging around dealerships, so I don't get to know the staff very well, but the local franchise that sold me my Golf in '11 still has the same manager. They also sold Saabs in '11, now I think they have some Nissans on the lot.

Selling a **** ton in China

Sent from my FRD-L14 using Tapatalk

Trickle down effect. Any dealers that were marginal on their business model are having problems. Between TDI scandal and several stop sales that affected most every vehicle they sell at one point or another, a lot of dealers had lots full of cars they couldn't sell. Part of the disagreement and resolution between the dealer council and VWGoA was cash payments to dealers to help offset the losses from these actions. Last I heard it was about $2mil a dealer.

That said I think there is a general change of business model in the industry and dealers are either failing or adapting. The old school model of sales persons of getting paid a fat commission on sales only is changing to getting a flat pay per sale and bonus/commission based on volume. Add to that incentives from manufactures.

Same goes with technicians. Easy customer pay work like services are having pay times cut for the techs while the total the customer pays is about the same or higher. More profit to offset losses up front in Sales. But other big reason for cut in hours to say cost of ownership is less for the reviews. More recalls and warranty work and less easy, higher paying, customer pay hours means a lot of techs are leaving the industry and kids out of tech school and high school are filling the holes.

Even heard a couple Japanese car companies talking about doing away with the current dealer model. Have delivery centers more like Carvana and warranty repair centers owned by the manufacture. Service is handled by lube shops like Jiffy Lube.

Jason

The VW shop I use has had some of the same staff there for about 10 years. I pay no attention to those on the sales floor, but the service manager and a couple of service writers are long timers. Not sure about the shop. They never get to interface with the customer unless there is a problem.

VWAG must not be suffereing too badly. They just announced the introduction of the Jetta line for the Chinese market. Flagship car will be the current Chinese jetta and the other two offerings will be locally built off the Seat models.

https://www.drive.com.au/news/volkswagen-reveals-new-jetta-as-a-brand-120849

Just a gut feeling, as I haven't been in the dealer organization for over 35 years, but:

I think the model of how a VW dealer sells and supports the product has changed quite a bit. There was a time when the cars were very different from the competitors, the attitude was to sort of survive from sales, but make your money running a really good service department. Having recently spent some time in Audi stores, and watching our local VW store building a similar facility, I can see the results from going back a few years when VW decided they wanted to be #1 in sales - and as a result they became a completely different company. You will no longer get service writers or parts people who have a clue about what a car, or in particular a VW is, or how it works. Gone are the days when even the dealer principal was probably a VW guy who started somewhere in the back shop or showroom. You WILL get a very fancy showroom, full of people who really don't contribute much if anything at all to YOUR needs. You will get shuffled into a closing room for "docmentation" and have a way over dresssed 30 something pretty lady try to upsell you on all kinds of insurance, accessories, etc. We used to call them "system houses" and represented the very worst of the North American side of the car business, but now that has all come to roost inside of VW. The cars seem to be going in that same way post dieselgate as well.