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Volkswagen U.S. Sales to Double; Dealer Count to Remain Flat

Higher throughput should mean better dealer profits, which VWA CEO Stefan Jacoby says averages a competitive 2% on every sale.

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NADA Convention & Exposition

ORLANDO, FL – Volkswagen of America Inc. may have ambitious growth plans for the U.S. over the next few years, but CEO Stefan Jacoby does not expect a coinciding increase in the auto maker’s storefronts.

Jacoby says despite a crippling recession, too many dealers still exist in the U.S. “This issue must be addressed,” he tells the National Automobile Dealers Assn. convention here today.

So while VWA expects to more than double its sales volume in the U.S. to 800,000 vehicles annually by 2018, the auto maker “will not significantly increase our dealer count,” he says.

That’s good news for existing Volkswagen and Audi dealers, who in 2009 delivered 296,170 cars and trucks, down 4.7% compared with 2008, according to Ward’s data, but ahead of the industry’s 21.2% downturn.

Higher throughput should mean better dealer profits, which Jacoby says averages a competitive 2% on every sale.

Record-low new-vehicle sales last year may have caused some players to step back, he says, such as General Motors Co. and Chrysler Group LLC, but growth plans remain on track for VWA – underscored by $4 billion worth of investment over the coming years.

“This is not a time of the timid,” Jacoby says, noting dealers have stood fast, too, by investing $800 million in their stores over the last five years. “That’s how confident we are in the U.S. economy.”

Nonetheless, he admits VWA must better familiarize Americans with its model lineup. They know the brand, Jacoby says, demonstrated by their willingness to pay a premium for its products, but they are unaware of the breadth of selection.

A new advertising agency – VWA replaced Crispin Porter + Bogusky of Miami with Los Angeles’ Deutsch LA in October – and a new advertising campaign launched during last weekend’s Super Bowl will address that dilemma, he says.

An improved focus on quality and safety also is paying dividends, Jacoby says, evidenced by eight VWA models ranked on Consumer Reports’ recommended list.

Additionally, VWA saw an improvement of 60 points in the J.D. Power and Associates annual initial quality study, whereas the industry gained 10 points. Four Top Safety picks from the Insurance Industry for Highway Safety helped as well.

“We are doing a better job of listening to our customers and making safer, more reliable (vehicles),” Jacoby says.

VWA is listening to dealers more than ever, as well, he says, pointing to dealer meetings where store owners set the agenda and no corporate issues are broached until dealer issues are addressed. Also, more than 10% of VWA dealers are involved in long-term corporate strategy planning.

Likewise, Jacoby urges the auto maker’s 580 dealers to continue investing as consumers’ desire for exclusivity grows and customer satisfaction becomes an even greater imperative.

“Your employees are on the front line, so invest in your people,” he tells dealers. “They are the future.”

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