By on July 20, 2011

Volkswagen just sold one of my inventions, and I didn’t get a dime for it. Volkswagen didn’t get rich on the sale either. After more than 20 years of trying not too hard, Volkswagen is getting out of the non-OEM service business and  sells its Stop + Go chain of quick-fit shops to the management.

“It was supposed to be an all-out assault on the non-OEM service business,” writes Automobilwoche [sub] in an eulogy. The attack ended in defeat.

In the eighties, I was supposed to start a campaign to “re-capture lost service customers” for Volkswagen and Audi dealers. According to the data, customers were deserting the dealers in droves as their cars came out of warranty.  Hold your comments about bad VW dealers. All brands have that problem, much to the delight of Pep Boys, AutoZone, Meinecke, and Jiffy Lube.

“Gentlemen,” I said in a presentation, “there is nothing to recapture. Most of the Volkswagen and Audi drivers have never been in a dealership.” If someone buys a car used, the service bays at the branded dealer are usually avoided at all costs. Half of Germany’s cars are older than eight years, and those cars come into a dealership only in a dire emergency. Those customers go elsewhere. “And if you want them, you need to build an elsewhere.”

“No glass and marble. Something that says low price and professional quality. And no Volkswagen logos.”

The idea was accepted. Stop + Go was born.  A lot of red. A lot of green. We opened a pilot store in Berlin and one in Cologne. Hundreds of these shops were to follow. International roll-out. The competition was shaking in its service booths.

More than 20 years later, the number of Stop + Go stores still stands at 24. It quickly became clear that Volkswagen wants to make a lot of money selling original parts, but they didn’t want to make the investment to develop successful pilot stores, core to any franchise strategy. A mid-term refresh of the Polo probably received more marketing support than Stop + Go in 20 years. It’s not that there wasn’t enough money. There was money for corporate identity, expensive architectural concepts, there were at least three expensive re-launches. At the last  re-org, the matter was elevated to the Volkswagen Group level, and the manager reported directly to the board.  All for naught.  The mascot (lots of red and green) I had created is now in the German Werbefiguren-Museum.

It’s a shame. Selling parts often contributes a third of a manufacturer’s profits. Especially in lean times, it can keep the company afloat. Apparently, Volkswagen does not need the money.

 

 

Get the latest TTAC e-Newsletter!

20 Comments on “The Autobiography Of BS©: How I Failed To Make Volkswagen Lots Of Money...”


  • avatar
    Philosophil

    Great story, Bertel. I wonder how many other servicing franchises out there are really just disguised manufacturers looking to sell their own, more profitable parts?

    • 0 avatar

      Few or none.

      The idea had been around. Ford Europe once bought a quick fit chain and let it go years later. GM could have leveraged Mr. Goodwrench into the same, but they dumped it.

      You need to get your hands dirty in that business. It’s not glamorous, but highly profitable if done right.

      • 0 avatar
        geozinger

        The whole misuse of the Goodwrench brand is another mistake by GM in the crisis state. They’d had it around for years, and even advertised it heavily back in the ’90′s (sponsoring Dale Earnhardt in NASCAR), but failed to turn it into something valuable. Instead, they (along with Ford) are now trying to compete with dedicated tire retailers in that arena. Bad idea, IMO.

        I could have imagined a chain of basic Goodwrench oil change stores (not unlike the ones from Valvoline and other oil companies in the US), with bigger ones that sold tires and etc. Before the BKs they could have purchased an existing chain of service retailers and rebranded them as standalone Goodwrench service centers.

        Now, just water under the bridge. And I still buy my tires at Discount Tire.

      • 0 avatar
        WorksForFordGuy

        Bertel;

        Apparently you have not heard of Quicklane – approx. 500 franchises in US and Canada. Owned/operated by FoMoCo; you will not see any connection to Ford at a Quicklane, but you’ll see plenty of Motorcraft parts….that is the dead give away.

        I know, as I worked on putting up their consumer web site 3 years ago. Ford has put a lot of effort and time into expanding the concept, and they sell a lot of parts this way.

      • 0 avatar
        geozinger

        @WorksForFordGuy: Quicklane is the concept I was thinking of for the stand alone Goodwrench store.

        What’s confusing is that GM has a Fastlane service (<30 min oil change) which sounds too similar to Quicklane.

        Once when I was out of town, one of my cars' oil change reminder indicated an oil change, I asked my FIL where the nearest Fastlane was. He sent me directions to the Quicklane. Turns out his area doesn't have a Fastlane anywhere, but the local Buick dealer accommodated me anyway.

      • 0 avatar

        Quicklane sounds just what we had in mind for stop + go, 20 years ago.

  • avatar
    spinjack

    This business is well outside the wheel-house of the auto manufacturers. They don’t know how to do it. Dealerships and service businesses are the customers of auto manufacturers. How many businesses know how to run the business of their customers?

    • 0 avatar
      Pch101

      This business is well outside the wheel-house of the auto manufacturers. They don’t know how to do it. Dealerships and service businesses are the customers of auto manufacturers.

      This is it right here. Manufacturers generally aren’t any good at retailing, and vice versa.

      Also, I would expect there to be a lot of pushback from the dealers (which I assume are franchised). I would think that they would howl and moan about getting cut-rate competition directly from the mothership.

  • avatar
    The Comedian

    “And no Volkswagen logos.”

    There does seem to be a bit of the VW logo in the Stop & Go logo.

    http://216.92.151.22/images/stopandgo.gif

  • avatar
    AKADriver

    How successful has Ford been with their push to market dealership service as a real alternative to independent chains? They seem to spend quite a bit on marketing – their radio ads are as frequent as Jiffy Lube’s. I’ve never owned a Ford so I don’t know if they actually are competitive, but they advertise things I wouldn’t expect from a dealership like a selection of major tire brands.

  • avatar
    Educator(of teachers)Dan

    Interesting story. Seems like it would be a great money making opportunity for a auto company that knew what the heck they were doing.

  • avatar
    morbo

    Like all things, branded service has been hit or miss for me. The two Ford dealerships I’ve dealt with (Chapman Ford and R.I.P. South Shore Ford) both offered good service at reasonable (meaning competitive to my quality local mechanic) prices. The local GM dealership (Kerbeck) has been a nightmare of lies, hidden fees, warrnaty claim denials, and constant rework. The local Chrysler dealership (also South Shore)) seemed to depend on who was running shop on a given day; sometimes good service sometimes horrific – $600 quote to replace struts on a noisy Sebring when my local mechanic fixed the issue with a couple drops of lubricant on the outer rubber housing to stop the noise.

    The Mitsubishi dealership where I’m at now in Northern Virginia quoted me $1600 labor to remove my dash and replace a broken plastic clip keeping my air vents locked (which they weren’t willing to even quote until I presented them with Mitsu Service Bulletin about it). My local mechanic did it for $100 plus an oil change.

    It really depends on how good the actual shop is. Branding doesn’t mean anything for quality service, at least wehre I’ve lived.

  • avatar
    rnc

    My brother owns his own shop (a rather large one, from fixing overly modified anythings, to being the only certified shop to work on railroad maint. trucks) and it’s all built on honesty, telling the customer exactly what is wrong (showing them) with the car and giving them the best price available (while even offering the short term/quick fix if they cannot afford the correct repair), offering limited credit and they keep a fleet of old strippers as loaners if the repair will take awhile.

    In terms of the automakers the formula is simple (see above) and just as long as the place isn’t selling cars or performing warranty work, the dealers can’t do a thing.

    Last time I was there, the police were being called as two customers having problems had found that the same shop had cut out thier catalytic convertors and did whatever to the sensors. Those are future long time customers.

  • avatar
    Dynamic88

    The dealers gave up their service business, post warranty. They were more interested in shaking everyone down than having the service business on a car for 15 or more years.

    When they gave up their post warranty service business, they gave up a big portion of their profit center. Imagine doing all the repair work for the 1st, 2nd, 3rd, and 4th owners of a car.

    If you drive a particular car, the local dealer of that brand should be your first choice for service. That so many people abandon the dealer as soon as the warranty expires is very telling.

  • avatar
    gglockster

    Car service is a tale of woe for the consumer and a license to print money for the shop. After changing the oil one too many times on my 91 Acura Integra, I grew up and learned to live with someone else working on my car in their service bay. Sear Automotive = Fail. Firestone, well their service is as good as their tires. Jiffy Lube has had slowly increasing prices and declining service for years. A VW dealer is a professional at destroying a VW car! You’re stuck with BMW service if you have a new BMW, but 03 and before the small independents rule. There is a serious franchise opportunity waiting for someone willing to make money fixing 5+ year old, 50K+ mile cars and these are going to be around a lot longer.

    To try and capture revenue the big brands now throw in scheduled maintenance service and suddenly strip down the routine servicing. The only threat to 20 year cars are: rising gas prices, and the destruction that dealers create during that 5 year 50K mile “free” inclusive dealer service.

  • avatar
    Robert.Walter

    There was an interesting study in HBR about 10 years ago that showed that there was a tremendous amount of revenue to be gained if an OEM properly tried to vertically integrate most aspects of the vehicle ownership cycle. Ford, under Jac Nasser, tried to do this, buyng Quik-Fit, and scrap/recycling yards, but for whatever reason faied and later sold these (probably wrong incentives for the operating managers as well as inexperience and incompetence and the closer one is to the building and retailing one gets in an auto company, the sexier folks think it is)…

    The failure was probably more proof that outside of design, manufacturing, retail, and financng sales, the OEM’s are not really very good at subtle thngs (sometimes not so very, or consistently, good at core things either….)

    • 0 avatar
      Pch101

      There was an interesting study in HBR about 10 years ago that showed that there was a tremendous amount of revenue to be gained if an OEM properly tried to vertically integrate most aspects of the vehicle ownership cycle

      Theoretically, that may be the case. (Synergies, blah, blah, blah.)

      In practice, vertical integration can be quite difficult because the skill sets needed to run a retail service business are very different from those that are needed to run a wholesale manufacturer.

      It’s possible that the idea of creating a branded chain of repair shops was a good one, but that having VW try to run it was a bad one. If they really wanted it, then they might have been better off either buying an existing chain if such a thing existed, or else creating some sort of private equity incubator that used VW’s money to hire an outside management team to build it largely independently of the parent company. The execution matters.

      • 0 avatar
        Lorenzo

        A company has to be careful with vertical integration, since it can run into anti-trust problems. Ford bought ignition supplier Autolite and was forced to sell it by the FTC, which clzaimed an anti-trust violation. Ford then formed Motorcraft, but structured it in such a way as to keep the FTC satisfied.

        When it comes to vertical integration, Ford was once a pioneer. Ford mines once produced ore for Ford steel mills that supplied Ford foundries, etc. At the Rouge, virtually every part of a Ford was made by Ford from Ford raw materials. Ford early on had its own dealer network and repair shop/replacement parts network as well.

        None of that would pass legal muster today, unless the operation were crafted carefully to avoid a huge number of state and local legal pitfalls, and no small number of competitors itching to sue. Retail expertise? Heck, the company would have to be run by lawyers, just to be on the safe side.

  • avatar

    A bank in Canada (CIBC) created its own brand of “white-label” (no label) ATMs, so as to collect the fees from both sides.


Back to TopLeave a Reply

You must be logged in to post a comment.

Subscribe without commenting

Recent Comments

New Car Research

Get a Free Dealer Quote

Staff

  • Contributing Writers

  • Jack Baruth, United States
  • Brendan McAleer, Canada
  • Marcelo De Vasconcellos, Brazil
  • Vojta Dobes, Czech Republic
  • Matthias Gasnier, Australia
  • W. Christian 'Mental' Ward, Abu Dhabi
  • Mark Stevenson, Canada
  • Cameron Aubernon, United States
  • J Emerson, United States