Volkswagen

Date: Wednesday, March 7, 2007

How successful was Volkswagen in the UK light commercial market in 2006?

We sold 26,829 vehicles — a record figure — making us number one importer for the first time. We broke a couple of other records too. Last year was the first in which we sold over 15,000 Transporters, including models such as the California, and the first in which we sold over 6,000 Caddys.

How come you've done so well?

Clearly product has had a major part to play in what we've achieved and continue to achieve. Caddy, Transporter and the new Crafter launched in 2006 are all pretty much at the top of their cycle. The other advantage we have is the strength of our dealer network. Remember that we work through dedicated specialist van centres staffed and run by trained people who understand the needs of commercial vehicle operators. We've got 84 outlets — 67 handle sales and service while the remainder are service only. We aim to expand the number of sales and service sites. There are about 80 to 90 towns and cities in the UK with a density of population that's sufficient to justify a major sales point, so we reckon we need to get to around 85. We should be able to do that within the next 12 to 18 months.

What changes are you making to the sales and service packages you offer customers?

More and more of our van centres are looking at recruiting dedicated finance and insurance managers who can, for example, talk about all aspects of leasing and contract hire. So far as insurance is concerned we're now offering everybody who acquires a new vehicle complimentary drive-away insurance for the first seven days of ownership. Obviously terms and conditions apply. During that time customers can either sort out their own insurance or opt to continue cover through us. Half a dozen of our dealers are piloting service while-you-wait programmes and a number of them are looking closely at extending their workshop opening hours. We're also doing a lot of detailed consumer research to help us better understand what van customers are looking for in today's market.

Sometimes they need to hire a vehicle. Can they do so at a VW Van Centre?

We're looking at developing a programme during the course of this year under which almost every single one — possibly all — of our dealers will offer rental vans. Most of the bigger ones do so already.

A number of manufacturers offer ready-to-go-to-work conversions with a line-up that typically includes tippers, dropsides and Lutons. Do you have any plans in this area?

Yes, we're introducing a conversion scheme that will include all three and they'll be appearing in our brochures and price lists. Customers will know exactly what they'll be paying, it will be easy for Volkswagen Financial Services and other finance companies to quote finance rates on the vehicles and easier for the price guides to take a view on residual values. We'll be using well known, high quality bodybuilders Ingimex and Boalloy.

What about fridge vans?

They'll be in the next stage of development of the programme.

And minibuses?

We already offer a nine-seater Transporter and we're testing a 15-seater Crafter minibus produced by Advanced.

How many Crafters did you sell in 2006?

We sold 1,101. Our target was 1,000 so it was encouraging to see how well Crafter was received. The first demonstrators appeared at dealerships in late July/August but sales didn't really get going until September, so everything we sold was accounted for in final quarter. Our target for this year is 4,700.

Is the optional Shiftmatic automated manual gearbox available yet?

Yes, and it is likely to be fitted to around 10 per cent of the Crafters we sell. It should appeal to anybody who does a lot of stop-start delivery work in conurbations, and especially to anyone who is on home-delivery work.

How did the run-out of LT go?

Really well. We sold 4,352 in its final 12 months with about 20 dealers accounting for 80 per cent of the volume.

You now have a 5.0 tonne Crafter available. How are dealers coping with the prospect of a growing number of VW sales being made above 3.5 tonne?

Those of our dealers who come from a truck background are comfortable with it, but if I'm honest we have others who are still on a learning curve. It's an area where we need to make further improvements.

What's happening with Transporter? When will we see a new one?

Not for another three years, but there will be a facelift before then. In the meantime we've just introduced a passenger-carrying Kombi version of the Transporter Sportline. We sold around 230 Sportline vans last year — deliveries started to come through in September/October — and each one carried around £1,000 worth of accessories. A lot of Transporter buyers — Caddy buyers too for that matter — want bespoke vehicles and are specifying optional extras such as air conditioning and satellite navigation.

Will you introduce a Caddy Sportline?

Don't know yet. However, our colleagues in Sweden did a special edition Caddy in conjunction with Harley Davidson in black and with plenty of chrome not so long ago and it looked really good; just the way a Caddy Sportline might look. So it's a thought and in fact we've had one mocked up for the accessories roadshow we do for our dealers. I think we might struggle a bit with a Crafter Sportline though.

Caddy's optional six-speed Direct Shift Gearbox (DSG) won What Van?'s technology award last year. It can be used either as a manual or as an automatic. How popular is it proving to be?

It accounts for about five per cent of Caddy volume. An example of a DSG Caddy will be on our stand at the British Commercial Vehicle Show along with a Shiftmatic Crafter and the Atacama concept vehicle. It's a futuristic design study based on a 4x4 Crafter.

How soon before we see Caddy Maxi, Caddy's bigger brother?

We hope it will appear here in early 2008. A seven-seater Caddy Maxi is also a possibility.

What about the Mitsubishi L200/Toyota Hilux rivalling purpose-built pick-up?

That's likely to appear in 2009.

Volkswagen doesn't have an environmentally friendly alternative fuel solution in its current light commercial line up. That seems rather a drawback in the present climate, especially when one remembers that owners of conventionally powered vans end up paying the London congestion tax if they venture into the charging zone. How is the company addressing this problem?

At present we're not finding that lots of UK customers are asking for vehicles that will run on alternative fuels, but it's becoming a hot topic. So we're looking at a lot of different technologies and we're focusing on the next generation of biofuels in particular. At the same time we're trying to make our diesels as fuel-efficient as possible and we believe that on that front they're as good as anything else that's on the market today.

How confident are you about VW's prospects for the rest of this year?

I'm optimistic. In January we did 110 per cent of our original target and we're currently sitting on 7,144 orders. That compares with 4,859 orders 12 months ago. This means that we're not chasing registrations so we don't have to distress the produce (ie start discounting heavily – SB). We can instead concentrate on continuing to build the brand, although we are prepared to be competitive when we need to be. We originally told the dealers that we wanted to sell 27,000 vehicles this year — we're certainly hoping to sell over 15,000 Transporters — and I'm confident we'll do significantly more than that. If we can get the production from the factories anything between 28,000 and 30,000 is eminently achievable in a total market that will probably be about the same size as the van market in 2006.

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