By on March 22, 2016

Volkswagen Chattanooga Tower

Volkswagen dealers in the U.S. want to be compensated for financial losses stemming from the diesel emissions scandal, and if the results of a recent meeting with company brass is any indication, the demands will soon grow louder.

Alan Brown, chairman of Volkswagen’s U.S. dealer council, led a small delegation of dealers to Germany last week to talk reparations and get a firm grip on the company’s strategy, Automotive News reports.

The size of the settlement they were seeking is unknown, but the meeting with global brand chief Herbert Diess and new Volkswagen Group of America head Hinrich Woebcken didn’t yield any plan to compensate dealers.

Brown had earlier called on the automaker to help “stop the insanity” that was engulfing dealers, many of whom are suffering from a large revenue drop and a disorganized allocation process — this after many sank big bucks into expanding their operations as Volkswagen embarked on a global sales push.

Volkswagen of America has been sending dealers an allowance to offset lost sales since shortly after the scandal broke, but that doesn’t cover the big losses some dealers have been hit with, nor does it take away the uncertainty of the future.

Though Volkswagen executives weren’t playing the reparation game just yet, they did shed some light on the brand’s strategy going forward.

Recent musings about Volkswagen becoming a higher-end niche brand sent dealers into a near panic, spurring Brown and others to go looking for assurances.

In a letter distributed to U.S. dealers following the meeting, Brown said Volkswagen had committed to continuing a mass-market strategy of compact and midsize cars and crossovers.

In the short term, Volkswagen was strong-armed by the dealers into providing a larger shipment of 2017 Golf Alltracks, a recently-announced variant of the Golf SportWagen, in order to generate interest and (hopefully) increase sales.

Reparations are sure to be a key topic among Volkswagen franchise owners at the April 2 National Automobile Dealers Association convention in Las Vegas — an event both Diess and Woebcken have said they will attend.

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20 Comments on “Volkswagen Dealers Are Just Getting Started in Reparation Hunt...”


  • avatar
    Tstag

    I have a solution for VW. Don’t do any deals with anyone in the US. Let VW USA go bust and withdraw the VW brand from the US market. But at the same time buy FCA. Then scrap the Chrysler range and rebadge VWs as Chryslers. Do bail out Audi in the US but only if it can be done for a reasonable sum. Otherwise kill that and resell Audi’s as Lancias or Alfas. Job done. VW saves billions, acquires Jeep and gets a US brand in Chrysler to replace VW. It also gets Alfa and the Fiat 500. The Fiat 500 range should then merge with the Seat range. VW should then kill off which ever brand is weaker in each local market. E.g Fiat lives in Italy but dies in Spain.

    Job done.

    • 0 avatar
      28-Cars-Later

      Interesting solution.

    • 0 avatar
      Big Al From 'Murica

      VW is probably the lone company out there that could rebadge their vehicles with Chrysler emblems and enjoy a perceived improvement in reliability.

    • 0 avatar
      SSJeep

      VW definitely needs a change of direction, and a big one at that. I dont think acquiring FCA is in the cards. VW cant afford it today given the debt they have taken on with prior acquisitions, and they especially cant afford it now with the billions in dieselgate penalties coming down the pike…

      I can see the US based dealers getting the raw end of the deal on this one unfortunately.

  • avatar

    Could the use of the word “reparations” in regard to a German company have been deliberate?

  • avatar
    sirwired

    You gotta love the non-stop tone-deafness of VW-Germany mgmt. They knew this meeting was coming, they knew that dealers are hemorrhaging money (and that a few Outback’d Golf Wagons wasn’t going to fix it), yet they STILL:

    – Weren’t prepared to discuss some more money tossed the dealers’ way.
    – Still haven’t articulated exactly how they are going to finally resolve the TDI mess, 4 MONTHS after it went public.
    – Seem to think their current strategy of selling mediocre Jettas and Passats (and shipping a competitive CUV lineup years late) is a good one. It’s fine that they aren’t going to stupidly try to go upmarket, but their mass-market product (with the exception of the Golf) is lame and stale, and everybody involved knows it.

    • 0 avatar
      dwford

      They give every indication that they do not really care about the US market

      • 0 avatar
        jkross22

        This is how VW shows they really do care. If corporations are people, I’d be curious to hear from a psychologist with a fresh copy of the DSM exactly what mental illness(es) VW suffers from.

    • 0 avatar
      brettc

      It’s been 6 months since it went public on September 18.

      I don’t expect anything less from VW executives. None of them seem to live in reality, except maybe for Michael Horn. Which is probably why he quit abruptly.

      For the USA, VW needs to have a car smaller than the Jetta (like the Gol or Polo), a competitive CUV, and a 3 row SUV. They need to make the Jetta and Passat competitive with the Civic/Corolla and Accord/Camry in terms of options and pricing. The Golf Alltrack might help some, but probably not enough. They also need to copy Hyundai’s warranty.

      It’ll be interesting to see what comes out of the NADA meeting on April 2.

      • 0 avatar
        manny_c44

        A small, tight car like the Polo wouldn’t help at all. The clean/compact design language of VAG is more or less the opposite of what Americans want, just look at what the Japanese have cooked up for the market place to satisfy demand: porcine, almost embarrassing designs. The Crosstour was too cynical to catch on, but it was close to being accepted.

        Only the old Audi Q7 approached American tastes. VW is probably better off as boutique here in the US. Or they have to release the Yeti here with a VW badge.

  • avatar
    dwford

    As Judge Judy would say – you can’t come to court looking for justice unless you come with “clean hands.” VW dealers have been selling crappy cars to ignorant people for decades. They deserve nothing.

    • 0 avatar
      Von

      This. Brutal as it is, is the truth.

      And before the flames come in: There are exceptions of course, some very bright people here in the B&B (and others not in the B&B) that have bought VW for various reasons, but that’s a tiny percentage.

      Personally, my VW turning point was when they re-badged a Caravan and advertised the heck out of it as “German engineering”, complete with a blond super model and babies.

      • 0 avatar
        DenverMike

        Most Americans hear “German Engineering” and mistakenly think it’s a positive. All I hear is “junk”. So VW pimps the hell out the phrase, 3 times in a single VW radio ad I just heard.

  • avatar
    kurtamaxxguy

    If USA dealers do not get reparations, what will they do? Simply put less emphasis on selling VW’s, or wind down VW sales and move on to another brand?

    I gave up on VW a long time ago due to their reliability issues. The current state of their diesels and dealers doesn’t inspire confidence.

    As for VW, they’ll probably do just fine here via their Audi and Porsche divisions.

  • avatar

    Anyone read the closing editorial on the back inside page of this month’s Motor Trend? We in the USDM just don’t ‘get’ VW. Right.

    • 0 avatar
      Von

      Haven’t read MT for years, so it’s just a reply or add on to your comment. It’s the job of the company to “get” the market and the consumers, not the other way around. Not if they want to make money anyway.

  • avatar

    We don’t “get” that we should be happy to buy a car with poor to piss poor reliability, terrible dealer service, expensive replacement parts, and at a premium price all because “German Engineering” and “Driving Dynamics”, when you can buy a reliable Mazda that does all those things better for less money.

  • avatar

    VW can still save it. VW’s niche, for years, was a good handling smaller car, and the lack of customization for the US market was a selling point, not an issue. The owners put up with the bugs because of this. These are the GTi buyers, the R car buyers, but they aren’t enough for a mass market brand, or one which aspires to it. Showing us the Scirocco every six months only tweaks the fanbois (guilty here), but is meaningless for the rest of the world. VW has always suffered from the issue of having a euro price point. Cars in Europe are lots more expensive, even before VAT. You won’t sell many 35k Golf in the US.

    Game change.

    VW needs to do a Hyundai warranty. Having been at the short end of VW “warranty”, they need this for the general public. Only Acura sucks as bad for warranty service.

    VW needs to fix the TDI debacle now. Buy back, make a deal, finish it. You can’t pull this band aid off slowly. I recently saw a TDI with a “DAS FRAUD” bumper sticker on it. If this is what your fanbois are doing….

    The rest of the market has moved. You can get a well built, sport oriented small car from just about everyone now. Long gone are the days a Jetta went against a Tempo. VW needs to get some US folks to design here in the US and send the plans back to Germany. It works for everyone else in the US market.

    I’ve no sympathy for car dealers of any sort, but I can see if I’d invested millions of dollars in good faith, built that glam showroom the OEM is pushing me to do, that I’d be calling my attorney every day to see what heat I can put under VW-USA.

  • avatar
    wmba

    VW seems to be in a state of paralysis and denial. They apparently hardly recognize they have dealers in the US and Canada,and expect them to do exactly as told. Having the dealers kick up a fuss was never something they planned on. This company, with its leaders having already resigned and used to having orders barked from the top down, is a ship barely afloat in stormy seas with a missing rudder.

    Six months into the scandal, they still haven’t come up with a plan to fix the diesels outside the EU, where they have officials in their back pocket who approved the ludicrous fixes like a software reflash and $1.64 flow straighteners.

    South Korea has gone after VW just as hard as the US, and is having the same problem of no solution forthcoming. A fine has already been assessed. The VW boss said he is waiting on Wolfsburg:

    http://english.yonhapnews.co.kr/news/2016/03/23/0200000000AEN20160323007700315.html


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