The Autobiography Of BS: How I Failed To Make Volkswagen Lots Of Money

Bertel Schmitt
by Bertel Schmitt

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.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

More by Bertel Schmitt

Comments
Join the conversation
4 of 20 comments
  • Robert.Walter Robert.Walter on Jul 20, 2011

    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....)

    • See 1 previous
    • Lorenzo Lorenzo on Jul 20, 2011

      @Pch101 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.

  • -Cole- -Cole- on Jul 20, 2011

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

  • ToolGuy Once again my home did not catch on fire and my fire extinguisher(s) stayed in the closet, unused. I guess I threw my money away on fire extinguishers.(And by fire extinguishers I mean nuclear missiles.)
  • Carson D The UAW has succeeded in organizing a US VW plant before. There's a reason they don't teach history in the schools any longer. People wouldn't make the same mistakes.
  • B-BodyBuick84 Mitsubishi Pajero Sport of course, a 7 seater, 2.4 turbo-diesel I4 BOF SUV with Super-Select 4WD, centre and rear locking diffs standard of course.
  • Corey Lewis Think how dated this 80s design was by 1995!
  • Tassos Jong-iL Communist America Rises!
Next