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

Bertel Schmitt
by Bertel Schmitt
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the autobiography of bs how i failed to make volkswagen lots of money

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=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • 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.

  • 285exp If the conversion to EVs was really so vital to solve an existential climate change crisis, it wouldn’t matter whether they were built by US union workers or where the batteries and battery materials came from.
  • El scotto Another EBPosky, "EVs are Stoopid, prove to me water freezes at 0 degrees Celsius" article.It was never explained if the rural schools own the buses or if the school bus routes are contracted out. If the bus routes are contracted out, will Carpenter or Bluebird offer an electric school bus? Flexmatt never stated the range of brand-unspecified school bus. Will the min-mart be open at the end of the 179-mile drive? No cell coverage? Why doesn't the bus driver have an emergency sat phone?Two more problems Mr. Musk could solve.
  • RICK Long time Cadillac admirer with 89 Fleetwood Brougham deElegance and 93 Brougham, always liked Eldorado until downsized after 76. Those were the days. Sad to see what now wears Cadillac name.
  • Carsofchaos Bike lanes are in use what maybe 10 to 12 hours a day? The other periods of the day they aren't in use whatsoever. A bike can carry one person and a vehicle can carry multiple people. It's very simple math to figure out that a bike lane in no way shape or form will handle more people than cars will.The bigger issue is double parked delivery vehicles. They are often double parked and taking up lanes because there are cars parked on the curb. You combine that with a bike lane and pedestrians Crossing wherever they feel like it and it's a recipe for disaster. I think if we could just go back to two lanes of traffic things would flow much better. I started coming to the city in 2003 before a lot of these bike lanes were implemented and the traffic is definitely much worse now than it was back then. Sadly at this point I don't really think there is a solution but I can guarantee that congestion pricing will not fix this problem.
  • Charles When I lived in Los Angeles I saw a 9-5 a few times and instanly admired the sweeping low slug aerodynamic jet tech influenced lines and all that beautiful glass. The car was very different from what I expected from a Saab even though the 900 Turbo was nice. A casual lady friend had a Saab Sonnet, never drove or rode in it but nonetheless chilled my enthusiasm and I eventually forgot about Saabs. In the following years I have had seven Mercedes's, three or four Jaguars even two Daimlers both the 250 V-8 and the massive and powerful Majestic Major. Daily drivers of a brand new 300ZX 2+2 and Lincolns, plus a few diesel trucks. Having moved to my big farm in central New York, trucks and SUV's are the standard, even though I have a Mercedes S500 in one of my barns. Due to circumstances with my Ford Explorer and needing a second driver I found the 2006 9-5 locally. Very little surface rust, none undercarriage, original owner, garage kept, wife driver and all the original literature and a ton of paid receipts and history. The car just turned 200,000 miles and I love it. Feels new like I'm back in my Nissan 300ZX with a lot more European class and ready power with the awesome turbo. So fun to drive, the smooth power and torque is incredible! Great price paid to justify going through the car and giving her everything she needs, i.e., new tires, battery, all shocks, struts, control arms, timing chain and rust removable to come, plus more. The problem now is I want to restore it and likely put it in my concrete barn and only drive in good weather. As to the writer, Alex Dykes, I take great exception calling the 9-5 Saab "ugly," finding myself looking back at her beauty and uniqueness. Moreover, I get new looks from others not quite recognizing, like the days out west with my more expensive European cars. There are Saabs eclipsing 300K rourinely and one at a million miles and I believe one car with 500K on the original engine. So clearly, this is a keeper, in love already with my SportCombi. I want to be in that elite club.