By on October 1, 2015

Jim Ellis VW

Twenty-two vehicles on the front line and not a single one of them a Volkswagen.

This wouldn’t be surprising if this were a used car lot or a new car store that sold a different brand, but this is Jim Ellis VW — the most successful Volkswagen dealership in the entire metro-Atlanta area.

How successful? They have two locations and sold Volkswagens every day for well over 44 years. This dealership was founded on day one with Volkswagens exclusively in their blood. No competitor in the southeast can come close to that level of enduring success.

So what does it mean when one of your most loyal dealers in the entire nation won’t even put your vehicles on their front line?

The brand is in deep trouble. It’s in the type of trouble that will require something extreme to change how consumers view their product.

When your dealers aren’t willing to front line your product, it doesn’t mean that only one of your products is now a slow seller. It means the dealer is anticipating that all of your products are going to be slow sellers for a while — at least those that can legally be sold. The only way the dealership can right the big ship and pay the ocean of overhead is to aim squarely at the calmer used car waters where other brands stand a far better chance of success.

This doesn’t happen in the car business. It never happens. In the last 16 years, I have never seen a successful dealer scrub out their entire front line of any mention of the brand that’s printed on the front of their building. It’s one thing to have a screaming match behind closed doors away from the earshot of your customers and employees. It’s quite another thing to openly give your boss the finger and tell your employees that the pecking order has changed because, for now, there is no alternative.

Your biggest supporter has just walked out of that private room and he’s not about to offer you just a minor slap in the face or even a brutal reality check for all the recent harm. He’s going to protect his own, and he’s doing it for a damn good reason. He needs to make sure everyone whose survival depends on the team’s success can still pay the bills. This is like a well-respected veteran player on a football team going up to the microphone after a big game and telling everyone that the owner, and the owner alone, completely fucked over the team and the entire fan base that supports them.

Who is to blame? Not the general manager of the team in the form of the CEO of Volkswagen of America. Volkswagen dealers are actually voicing their support for Mike Horn who currently appears blameless for what took place. Not all the employees who operate the stadium in the form of low-to-mid-level Volkswagen employees throughout the world. The problem, at least for now, is located squarely in Wolfsburg, Germany.

That particular problem is going to take time and an awful lot of fines and penalties to thresh out. But what about right now? I mentioned elsewhere that Volkswagen is in a world of trouble. Even if their most loyal fans are sticking to the product for now, the new car marketplace won’t be nearly as forgiving to a brand that is widely known for serious quality issues.

A lot of what needs to be done is structural and long-term, but the dealer network doesn’t deal with customers who are willing to wait for long-term solutions. They need a compelling reason to buy a Volkswagen right now. Rebates and incentives alone won’t get Volkswagen dealers those customers. In extreme situations, the manufacturer needs to offer the general public expensive and compelling solutions.

Let me offer a few examples. After 9/11 it was virtually impossible for dealers to sell new cars and, contrary to the myths of the moment, it wasn’t George W Bush’s proclamation to “Go shopping” that did the trick. It was 0% financing from General Motors that put customers back inside the dealerships. When Chrysler was knocking on death’s door back in 2007 and 2008, they invoked a lifetime warranty that helped them get a brief stay from the executioner.

Volkswagen needs to offer something amazing that other automakers won’t match — at least for right now. My question to all of you is, “What should that be?”

Should they go long on warranty protection? Offer lease deals as if they’re being subsidized by the federal government? Or offer buyback guarantees for current and future customers that make owning a Volkswagen a low-risk proposition?

Every one of these measures has more than a little bit of financial hurt tied into them. However, if the front line of Jim Ellis Volkswagen is any indication, these measures are long overdue.

What would you chose as the elixir to cure Volkswagen’s ills?

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139 Comments on “Hammer Time: How Can Volkswagen Save Themselves?...”


  • avatar
    mdanda

    Agreed–Very little new information has come out lately. Now we wait for the incentives. I’m looking forward to that! A good discount can make up for a lot of things. Perhaps a Golf of some sort is in my future.

  • avatar
    mu_redskin

    they need to offer current VW lease holders the option of turning in their lease early, say 6 months left, and get them into a new car without being responsible for the remaining payments. They also need to heavily subsidize lease rates. I think a killer deal that no automaker has thought to do yet would be do some leasing system similar to Apple and similar program at Sprint’s Iphone for Life plan. Think about that for car buying – a new car every year or so almost gaurantee’s demand. Also to sweeten the deal – subsized mileage overage rates.

  • avatar
    RHD

    It would take something so drastically cheap that consumers could overcome their better judgement, like buying tools at Harbor Freight.
    $12,999 with 0% financing and a 10 year, 120K bumper to bumper warranty might do the trick. VW just did a melamine-in-the-baby-formula times one hundred sized cheat.

    • 0 avatar
      Luke42

      That’s about what it would take for me.

      I’m the former owner of a 2001 VW Jetta TDI, and I would love to be able to be a VW fanboy. But the practicalities of VW ownership turned me in to a Toyota fan.

      VW has to be so cheap to buy that I can afford to replace a major component every year or two with the same TCO as a Toyota — OR so cheap to maintain for the 2nd or 3rd owner that they can compete with the Japanese.

      I *like* cars that are fun to drive, but I *love* cars that start every morning year after year. The fun attributes which sell VWs are a tie breaker for me, and not a substitute for competent basic transportation.

    • 0 avatar
      Lorenzo

      The problem with a VW warranty is that they’ve been very cheap with dealers, refusing warranty reimbursement for chronic problems that are never corrected at the factory – and a lot of customers know it.

      This mess MAY kill the vaunted Wolfsburg Arrogance, but maybe not. It seems to be ingrained in the company, especially the engineers, the very people who need to come up with solutions.

      It seems that ultra-low financing, making options standard, and break-even pricing are all they can do for now.

      • 0 avatar
        993cc

        I’m wondering if the decision to turn VWoA over to the guy from Skoda (sorry, I forget the name) might help in this department. Skoda seems to have a very good relationship with its dealers and customers.

  • avatar
    Waterview

    Volswagen’s have always been niche cars (at least here in the US), so this is relatively easy. Follow the Hyundai model and extend warranty coverage to 4 or 5 years for the entire vehicle and 10 years for major components. If their cars aren’t junk, it won’t kill them financially and may actually bring new buyers. They also need to give their dealers some latitude to help build customer trust and loyalty (I.e. Warranty claims).

    • 0 avatar
      Chan

      “If their cars aren’t junk…”

      Between VW’s reliability issues of the past 10-15 years, the horrid dealer network that keeps customers on their knees, and the fact that their diesel cars need drastic reductions in performance and economy to meet regulations, we may have a problem here.

      • 0 avatar
        Waftable Torque aka Daniel Ho

        This was written 10 years ago, I don’t think anything’s changed.

        http://www.thecarconnection.com/tips-article/1007794_mechanics-tale-vw-heal-thyself

      • 0 avatar
        Waterview

        Glad you noticed my attempt. As much as I like VW’s styling, I just couldn’t accept their poor reliability reputation. Hyundai did have the same issue and essentially “bet on themselves” by offering those long warranties. I’d love to see VW commit to making reliable cars and back it up with a difference making warranty. Corporate arrogance will likely get it the way.

        • 0 avatar
          Chan

          I like VW’s styling, VW’s driving feel, VW’s paint quality.

          Unfortunately, those three do not make a good car, especially one that people need to rely on for everyday use.

  • avatar
    ciscokidinsf

    Basically, VW should do their own version of ‘Cash for Clunkers’ that will include, New for sale, Used for sale and owned by public:

    New Inventory – Buyback from dealers at what they paid – ship it to Asia and sell it there.
    Used for sale – bring your used and not sold TDIs to VW – we will pay high Blue Book trade value + $ for your trouble
    Owned by public – Bring your TDIs get a $3000 Incentive on a trade + your trade is valued at high BB

    Obviously sign that those taking the deal won’t sue VW or be part of a Class Action lawsuit, etc….

    The point is to continue selling the non-tdi inventory and make the Public feel that they got some justice. If lawyers settle this, all TDI people will get something ridiculous like a $50 card for parts at VW as settlements while lawyers get millions in Cash.

  • avatar
    RideHeight

    OMG OMG!

    Caddys for 14K!

    • 0 avatar
      CoreyDL

      You don’t want a Northstar STS. For reals.

      • 0 avatar
        RideHeight

        Auugh! This is what happens when your office fills with people.

        Wasn’t clear. I meant the Caddy, VW’s equivalent of the Transit Connect. They’ve seen the TC’s and its clones’ success here, VW should sell the gas version in the US at essentially cost.

        It’s presumably reliable enough to have become a fixture throughout Europe and could gain commercial customers as well as the occasional oddball private ones like me. And it’s a handsome little box.

        • 0 avatar
          CoreyDL

          Lol, oh. I feel that’s an unlikely happening! The Transit and the PROMaster have it covered. GM needs an entry though, one which is NOT a rebadge of a Nissan.

  • avatar
    DeadWeight

    VW is to Germany what GM is to the U.S.

    I do not intend to editorialize, but rather, communicate a statement of fact (proven by historical precedent).

    VW will not be allowed to fail no matter how deep its transgressions, as ultimately may be proven by any and all investigations.

    • 0 avatar
      bball40dtw

      I’d worry more for VW of America than VW in general. Hovering around 2%-3% of market share before this AND pi$$ing off your most loyal customers is a recipe for disaster. The loss of value on TDIs is going to anger some of those owners. Despite all the issues you have when owning a VW, you could always sell it quickly, and typically for more than you owed, to someone else that was a bigger masochist than you.

    • 0 avatar
      schmitt trigger

      To paraphrase that famous byline:

      “What is good for Volkswagen, is good for Germany”

  • avatar

    VW has been in trouble for a long time. Their management has neglected the US market, and not for no good reason, but to not have a competitive SUV or crossover and expect to be a major player has been a mistake for the past 20 years. Their continued reliability and dealer service issues, it’s like they think their customers are masochists. Then this whole emissions scam is the cherry on top of the corporate arrogance sundae. They have had problems for a looooong time and have proven they don’t know what to do, or are unwilling to make necessary changes. Other companies have caught up to ze Germans and they haven’t really come to terms with it or figured out that they are at some point going to have to fix the company wide problems they have been ignoring for a long time.

    It sucks for the everyday rank and file that they have been lied to and misled by their management, but sadly these days it’s just another in the long line of large corporations treating employees as expendable resources. There is no moral factor in corporate decisions anymore. The deciding factors are solely bottom line and investor dividends. If the company crashes and they have to lay off thousands of peons worldwide it won’t matter to the execs making the decision. Their contracts have buyouts and guarantees, they are invincible. Until there start to be real (prison) consequences to the level of corporate maleficence that has been displayed by GM/VW currently (not to say the others are innocent either but these are the glaring examples) and by the banks and any company propped up by the “Too Big to FAIL!” moniker, the common people will continue to be the ones that get screwed. The execs will keep getting fat contracts with obscenely generous terms that will award them even for their incompetence and failure to do their job.

    I know posting on a damn message board isn’t going to change anything, but damn if I’m not so sick of stories like this. It pisses me off to no end, and I have seen the thinking up close with companies I’ve worked for as well. I just feel powerless to actually make anything change. Short of running for president or congress which is a fools errand thinking even then that an honest person could function in such a den of liars, cheats, and men on the take. The whole system is broken but what can anyone really do to fix it? That is the most frustrating part, is how can anyone fix it and is it even possible it can be fixed. Or is the problem that the whole thing is already fixed, and it’s the regular Joe that’s on the losing end.

    • 0 avatar
      jkross22

      A reasonable response to this is to not buy VW products. And to not do business with a big bank. And to not buy gas from a BP franchise.

      Problem is, not enough people think this way for a long enough period of time to make a significant impact.

    • 0 avatar
      jkross22

      VW needs to show incredible good will and good business sense. If they don’t, they indeed risk losing a chunk of what little market share they still have. They’re playing catch up with the EPA and they should be out leading what they are going to do to fix this.

      I’d do this: Offer TDI owners impacted by this a trade for an e-Golf. 1:1. Eat the loss. Since the e-Golf has such a smaller drive range, offer each new e-Golf owner up to 20 days per year where they can swap their e-Golf for a regular GAS car, gratis (Be ready with a fleet of loaners for this, but based on the poor sales, they have the inventory for this). Over 20 days, the loaner car is billed at a reasonable rental rate.

      They need to instill the thought that they will do the one thing they’ve not shown they can do: Take care of their customers.

    • 0 avatar
      Dave M.

      Amen. I too am tired of having to watch over my shoulder at every home/retail interaction to make sure I didn’t get screwed.

      And when your corporate malfeasance is proven, I carry grudges a long time. I don’t buy Exxon gas. I won’t drive GM. I have a whole list of people who won’t get my money. They won’t miss my money singularly. But if a whole bunch of people did the same…

    • 0 avatar
      Whatnext

      VWOA is not the be all and end all to Volkswagen. I realize this might be hard for sone Americans to grasp.

  • avatar
    Pch101

    I realize that the VW story matters, but it’s getting to the point that TTAC has a higher ratio of VW-related content than the VW Vortex blog.

    In a few months, none of this will matter. VW will continue to dominate in Europe and struggle in the US, just like before.

    • 0 avatar
      DenverMike

      When you run a business, you “strike while the iron’s Hot”. Part of this is capturing clicks from anyone on the interwebs doing an up to date search on the topic.

      At one time, every other TTAC article was on Saab deathwatch. I didn’t give 2 sh!ts, so I moved on to things I liked.

      But VW blogs can’t be loving this.

    • 0 avatar
      bball40dtw

      VWVortex has a much higher level of sadness though.

      Original Post: Should I buy this W8 Passat AWD that may have a timing chain and transmission problem?

      Answer #1: Oh yeah. It’s a great car. After I bought 47 VW specific tools and a lift, mine runs great. Just budget $1200/month for schedule maintenance.

      Answer #2: I loved mine. After three timing chain replacements, 14 window regulator failures, a new subframe, replacement of the Haldex AWD system, torque converter explosions, and fuel injector issues, it ran great.

    • 0 avatar
      krhodes1

      @PCH101

      I agree with you 100%.

      VW struggles in the US. Toyota struggles in Europe. Both are in the top 3 of automakers in the world. VW did something stupid, and got caught. They will pay a ton of money, that they can in fact afford to pay without too much of a dilemma. Six months from now very few people will care.

      I don’t care very much now, other than I am kind of watching with interest to see if maybe there is a nice dip in the prices of ’07-08 diesel Grand Cherokees, something I would rather like to pickup.

  • avatar
    seth1065

    Well all the dealer wants is to move cars, so have a enhanced trade in voucher for TDI owners of which I am one, if VW figures out it is pricey to refit the 09-13 cars , cut a deal with the Gov, we will take the cars out of the US, you cut the fine from 2 billion to 1.5 billion. Pay high edmunds, kbb what ever and add 5,000 as a sorry we F up discount on any VW we can sell you, not sure how many TDI’s are leased I guess not that many. That would get your core die hards a chance to get into a new car or at least a chance to say VW did the right thing for the owners affected. Some owners will not take the deal, keep their cars and not do the recall if they live in a non testing state. yes it will cost a boatload but that is the price VW has to pay. The other option long term is a longer warranty or price TDI closer to their gas twins and hope and pray that the buying public moves on and forgets. They got two plants in North America so they have to move cars. Oh and get that SUV here faster.

  • avatar
    stevelovescars

    I often see franchised dealers with non-marque used cars taking up the whole line closest to the street. They make more margin on those anyway. Not that this diminishes VW’s problems, just saying.

    They should have come out with a Hyundai-style warranty years ago to combat concerns about their quality. That alone won’t get them moving now.

    • 0 avatar
      Nedmundo

      I’ve seen the rows of non-marque cars too, which often include higher end cars than sold new at the dealership, like a 335i or E-Class outside a Mazda or Honda dealership. They make more margin on those cars, as you said, but they’re also advertising, saying essentially, “Hey, look what someone traded in for an Accord.”

    • 0 avatar
      mchan1

      “They should have come out with a Hyundai-style warranty years ago to combat concerns about their quality.”

      That and the facts that Hyundai, and it’s related Kia, both have Improved the quality of its vehicles just about every generation while keeping that long warranty period while the dealerships weren’t as arrogant when dealing with customers.

      VW lost much Goodwill (opportunities) over the years and lost whatever it may had left now with DieselGate!

  • avatar
    rlrides

    I would consider trading my old GTI for a 2016 if they offer a 10/100 warranty and 2-3K owner loyalty cash. Otherwise, I will probably get something more reliable. The MK7 GTI has plenty of problems already, but it sure is great to drive!

  • avatar
    DevilsRotary86

    “How Can Volkswagen Save Themselves?”

    Free dead dog in every trunk? It worked great for Conquistador Coffee!

    Sorry, couldn’t help myself. I have no idea why that Monty Python sketch came in to my head when reading the headline. I will show myself out now.

  • avatar
    redliner

    They should release a barage of witty tongue-in-cheek ads that basicaly say, “We screwed up, but the gas powered Golf is still the best hatchback under $30k” They could make an ad where a “naughty German” gets whipped or somthing. …Or an ad where the Pope takes VWs confession and forgives them. Anything to make people laugh and move on.

  • avatar
    Davekaybsc

    I like the Golf. The only way I would get one though is a lease, I don’t trust it any longer than that. VW has no deals on it. Little or nothing down on a low mile cap 3 year lease for a loaded, $30K Golf 1.8t SEL is $400+ a month, barely any less than an Audi A3.

    A Buick Verano Turbo, same $30K, is closer to $300 a month. If VW can cut $100 out of a Golf lease, I’ll look at it. Otherwise not interested.

  • avatar
    Felix Hoenikker

    VW needs a multi level plan to get out of this mess in NA. Enhanced real warranties, cheap leases, buy backs, tons of cash on the hood, etc. They could rotate two programs at a time to keep from fatiguing the market with the same deals. As one of the previous posters said, VW is too big to fail in Germany as GM was here. So, as long as they want to stay in NA, they will need to take a hit on earnings to boost sales and regain the customer’s trust.

  • avatar
    Waftable Torque aka Daniel Ho

    If I were VW, I’d buy a company that manufactures dynamometers. Then I’d find a way to cut costs, and distribute one to each of the 11 million owners. Viola, now their cars meets emissions when attached to the thing. That would respect the letter of the law, if not the spirit. And if you have to actually go somewhere, they’ll sell you a nice gas version…

  • avatar
    FreedMike

    Two words: virgin sacrifices.

    Seriously, as a former VW owner, I can tell you that between the model I owned, and this debacle, I have no desire to buy another one. And that’s a bloody shame, because I drove the new Golf and it’s a great car. The Passat is not bad either. But the non-VW fans who will shop these will also be shopping cars with pristine reliability reputations, made by companies that didn’t seek to actively screw them over.

    So…I’d say VW is going to have one hell of a hard time getting non-VW fans in the door. I don’t think giveaway pricing or financing will work – that just puts the brand on the Mitsubishi path.

    Extended warranties? Maybe, but it’s lipstick on a pig.

    Personally, I’d concentrate pretty much all my efforts on saving the customer base the brand has. I’d service the living bejeezus out of the people who bought the doctored-up product, no matter what it cost, and base my marketing around that.

    The second thing I’d do is start to make things right with my dealers, who have been screwed over royally. Their loyalty is key.

    I’d target my marketing at how VWs drive, and maybe even offer people money incentives to get in the driver’s seat. I mean, this brand offers some of the best-driving vehicles made today, so sell that.

    Instead of lowering prices, I’d concentrate more on giving the existing models more premium features at the same price.

    Unfortunately, this brand has a LONG road back. I think it might take 5-10 years to circle back to where they were prior to this debacle. They’re gong to have to pretty much be prepared to suffer through a lot of lean years. But they’ve invested too much in North America to pull out, that’s for sure.

    • 0 avatar
      28-Cars-Later

      Such a waste though, lets sacrifice the skanks instead and I’ll keep the virgins.

    • 0 avatar
      Ryoku75

      The only reason recent VWs entice me, is that they have fairly decent greenhouses, offer a real wagon, and the stylings still modest.

      Unfortunately with a well designed body you have to deal with VW hardware underneath, and maybe some Audi bits, and the CEL from a Veyron.

      If I could I’d have a VW Golf wagon with Honda hardware built into it, German rust prevention AND Japanese reliability!

      • 0 avatar

        Honda and Rover tried that about 30 years ago. The results weren’t pretty.

      • 0 avatar
        krhodes1

        Heaven is a place where cars are engineered by Germans, styled by Italians, have British interiors, are priced by Americans, and are built by Japanese.

        Hell is where cars are engineered by the Italians, styled by the Japanese, priced by the Germans, have American interiors and are built by the British.

        Thank you, please tip your server!

        • 0 avatar
          CoreyDL

          I think the cars which get closest to the awful combos you just described are:

          Sterling 827
          Merkur Scorpio
          Shogun Pinin
          LaForza

          • 0 avatar
            28-Cars-Later

            Volvo 780

          • 0 avatar
            CoreyDL

            Oh! I actually thought those were called “Volvo Bertone Coupe.” Never really realized they had their own number.

            I will add the Allante to this as well.

            PS – I love the Swede-PLC interior of the 780.

            There was also a Fiat at some point (Clarkson bashed it in a video) where they let Honda do the styling for some reason, and then did the rest of the internals with Fiat. Fiat Ital? Something.

          • 0 avatar
            FreedMike

            Don’t forget…

            Chrysler TC by Maserati

            And while we’re on the subject of Maserati, the Citroen SM. Bizarro Citroen engineering, made perfect with a fidgety Italian engine. My choice for the Worst Car Ever Made, at least for the 70% of the time it won’t run. The other 30% is boffo.

            And…the DeTomaso Pantera – Italy’s first effort at a rolling convection oven.

            If I remember right, Volvo made the Bertone coupe, which was a glorified 240, and the 780, which was a glorified 740. Really nice interiors, tho. But I will take that weird Franken-Volvo with the 740 wagon body and Mustang GT engine.

          • 0 avatar
            28-Cars-Later

            I’d take a Volvo Bertone coupe all day long for a swap, but you can keep the 780 and its unobtainium.

            I’d also take a Chrysler TC and probably an Allante. Probably.

          • 0 avatar
            jimbob457

            As a former Sterling owner, I can attest to the folly of taking a vehicle designed for the European market and trying to sell it in the USA. However, as a used car proposition, a two year old Sterling with decent electronics was almost a once in a lifetime deal back in the day.

          • 0 avatar
            CJinSD

            I worked for Crutchfield twenty years ago. they designed installation kits for mating aftermarket head units with factory stereo wiring and dashboards. Hondas were the install guys’ favorite cars. They had robust, logical wiring and were made out of materials that could be assembled and disassembled without damage, which was anything but true of lesser cars. Back then they also had standard dash openings, which basically accepted any DIN or JIS radio with no modifications or faceplate alignment issues.

            There were some cars that are revered for their quality that fared really poorly in the wiring and adherence to industry standards areas, particularly premium German cars, as anyone that has had a remotely located parallel fader control or a separate factory amplifier that runs four speakers off of two low level 8 ohm speaker inputs from the head unit can attest. Try getting one of those amps to accept an aftermarket head unit. I think there were special pre-amp boxes that were supposed to adapt line levels for them. I also think satisfied buyers of those boxes were statistically insignificant.

            The Acura Legend was all Honda from a radio install perspective. Installing a head unit involved 15 minutes soldering radio wires to a harness and then plugging it in. Speakers fit how and where they were supposed to without kludges. Amplifiers didn’t pick up ignition interference or cause fuses to blow. Any guesses on the Sterling? There was no evidence that Honda had anything to do with its development from a car stereo installer’s perspective. It had more in common with an Aston Martin Lagonda than an Accord. Haphazard doesn’t scratch the surface in describing those cars’ construction.

  • avatar
    Zammy

    > “How Can Volkswagen Save Themselves?”

    How about a 10-year 100k money-back warranty? Any time during the warranty period if you are dissatisfied with your VW for any reason you can return it for the original purchase price.

    • 0 avatar
      matador

      You’d get a bunch of VWs back around 90k miles, especially if it’s no questions asked.

      That said, you’d move a bunch of them. Free cars will get people in the showroom. Just ask Mitsubishi how it ends….

  • avatar
    PrincipalDan

    Nice color combo on the Flex. Must have bought it at auction, I can’t think of anything you’d trade your Flex for at a VW Dealership.

    VW save themselves… Publicly renounce diesel and embrace hybrids. (Not that I think either one is the holy grail but it will get the idiot publics attention.

  • avatar
    vent-L-8

    The Acura dealer in Fairfield Ohio never has actual Acuras in front of the dealer, only a colorful random collection of used cars.

  • avatar
    87 Morgan

    Steve, you pose an interesting question. One that I am not certain can answered inasmuch that personally I do not believe that VW USA can save themselves.

    I speculate that within the next 12 months we will see the signs come down from many of the smaller stores who perhaps had not done a good job growing their used car departments to levels that could keep the doors open. I believe this will be for certain occur in the northwest where being known as a green company carries more weight than in a place like Texas. Not that Texas is full of folks who don’t care about the environment but you see a lot more bro dozers there than you do in Portland as an example.

  • avatar
    70Cougar

    A lifetime bumper to bumper warranty is the only thing that would put me in a VW, and that was true before the emissions scandal. I’d love a GTI, but I’m afraid to own one.

  • avatar
    sirwired

    I think an abject apology (i.e. full-page ads in all the major newspapers, prime-time commercials, etc.) would be a good start. And a buyback program with generous terms for all the affected owners.

    To win customers back, I think a bold move on the warranty front would be just what Herr Doktor ordered. VW’s perceived poor reliability has been a real thorn in their side for years here, and just like with the Koreans, a generous factory warranty would go a long way towards restoring trust in the brand (or at least making it less risky to trust them.) And if said warranty turns out to be expensive, it might be just the kick in the nads VW needs to finally start taking reliability seriously. (It’s hard to measure the cost of reputational damage due to poor reliability, but it’s easy to read warranty bills.)

  • avatar
    msher4

    What they should really do – is give Sergio Marchionne his wish – and merge with FCA.

    Fiat / VW / Chrysler would have a better lineup together than they each have alone now.
    Ferrari is once again independent – but, Lambo / Ferrari / Porsche in the same stable – killer. McLaren would become an afterthought with those three collaborating and producing top end product.
    Jeep / Audi would be a great way to move Jeep upmarket, and kill Land Rover, Jeep brands on SUVs and Audi brands on sedans.

    This also gets VAG much better scale as well as much better diesel technology from Cummins.

    What can they do to get people to buy now: Unlimited Warranty; 0% interest (purchase or lease); Free Maintenance for 75k miles; and whatever else they can throw in.

    • 0 avatar
      krhodes1

      How does VW need more scale when they are already in the top 3 car makers in the world? The US /= The World. The US is but one market that is rather different from most of the rest of the world in what it wants to buy. It is still an important market, but it is not THE MARKET anymore for automobiles like it was 40-50 years ago. Those days are long gone. And it is a market where there is no margin in new car sales.

      Would you propose that Toyota merge with FIAT so Toyota can deal with their “Europe Problem”? For that matter, Toyota is not doing much in China – is that a huge problem for them too? I’d actually call that a bigger problem for Toyota than VW’s lack of US success – 1.5B potential customers vs. 350M customers.

    • 0 avatar
      dal20402

      I can think of few combinations that would work out worse than VW/FCA. Huge redundancy in Europe, doesn’t address either company’s major issues in the American market, and vastly different engineering cultures.

      FCA has a good merger candidate — PSA. VW will weather this storm, although its efforts to become more than a bit player in America are now doomed for another couple of decades.

      • 0 avatar
        Pch101

        VW would be fortunate to have FCA’s US business, and FCA would score a home run if it had VAG’s European business.

        But the corporate cultures would probably clash. I doubt that such a deal could happen — if the government ownership didn’t stop it, then European regulators would, given the combined market share.

  • avatar
    andyinatl

    VW has historically never been nimble on its feet. I doubt there will be any significant discounts, extended warranties past 5/50K, or even helping its dealers. I think VW will just subsidize the VWoA for as long as possible until the current issues are memories from long ago.
    News cycle will roll over to something else, plus a LOT of people don’t really follow these stories to begin with. Remember how long it took Hyundai/Ford to move past the EPA/real world mileage issues? Granted this is more serious of an issue, but it’ll pass as well…

    • 0 avatar
      brettc

      I can see this happening. The local dealer I most recently had my car serviced at emailed me yesterday basically saying that they didn’t know anything about what VW plans to do either, but they’d take car of me whenever VW gets their thumb out of their butt. VW’s silence has been deafening so far. We’re almost 2 weeks in and the little that’s been said has been from Michael Horn. And of course we can’t forget the awesome web site they put up too that tells us nothing.

      I don’t know if VW has hired a PR/crisis management firm but it doesn’t seem like it. They are definitely not handling it well so far and I can see them doing the bare minimum to just satisfy EPA/CARB. They should have offered a Hyundai-like warranty years ago but they didn’t. They should have introduced a 3 row SUV years ago but they didn’t. They should have a decent CR-V and HR-V competitor on lots but they don’t. Instead they introduced the new Golf, which is a plus, and then facelifted the Jetta (and decontented it some more) and then showed off a Passat that looks pretty much like the last one.

      It seems like they should be able to get through this and make most people happy, but so far the experience is that they’re not really trying too hard. Hopefully I’ll be proven wrong by October 7, but so far it’s not looking good.

    • 0 avatar
      dal20402

      I think you nailed it.

      The people inside Volkswagen have contempt for regulators and think the customers will be there no matter what. They’re just going to do what is necessary to get the government off their backs and then hunker down to sell the same products as ever (although now with urea on the diesels).

      VW is not a company I’d call responsive, to anyone. Creative and occasionally brilliant from an engineering perspective? Yes. Responsive? No.

      • 0 avatar
        Pch101

        I would say that the odds are 50-50 that the board members and senior management didn’t know about this, and that it was an effort by the engineers to achieve a goal that couldn’t be met within the constraints set by the company. The goal would have been to fool the management that had set up the underlings for failure, not the regulators.

        • 0 avatar
          dal20402

          Whether or not that’s how it happened, the contempt and disdain for regulators in the Volkswagen HQ culture is very well established by this point. There will be no effort to go beyond the bare minimum necessary to get the government to go away.

          • 0 avatar
            Pch101

            Whatever happens will necessarily be a compromise because VW will probably not be able to use retrofitting to get the cars into compliance. (Some improvement may be possible, but full compliance won’t be doable.)

            The inability to fix the cars will be offset by a higher penalty and more scrutiny, because there won’t be another realistic option.

  • avatar
    Timothy

    I’ve owned several VW’s, and both were far more reliable than my ST. I’ve actually started considering trading the ST in on a ’16 GTI w/ PP. They are fantastic cars and, this is incredibly painful to say, I’m really sick of driving stick in the Boston traffic. My left foot actually hurts.

    So.. what would it take? A fantastic trade on my ST, a few hundred over actual invoice on the GTI, and an extended warranty matching what Ford gave me on the problem child I currently have (75,000 bumper to bumper)

  • avatar
    udman

    I hate to say it but I think it’s time for VW to fold up it’s US tent, and go back to Europe. We really won’t miss them, and VW owners would just find an alternative to the brand they currently own. They can either go upmarket (in the form of Audi, BMW, Benz, or Porsche), or go after something quirky like Subaru or Mazda.

    Can anyone think of a logical reason why VW should stay in North America? Do they offer anything that other car companies can’t provide? And is the brans iconic enough to make it on these shores?

    • 0 avatar
      fincar1

      Well, there is something to say for that idea, except for one thing: Dealers. The loss of that business to all the VW dealers and their employees in the US would be a significant drag on the economy, one that isn’t needed right now. It will be bad enough as it is, I’m thinking that there will already be VW salespeople, technicians, and service writers looking for jobs because of the hit that VW sales will take.

    • 0 avatar
      FreedMike

      I’d guess they have way too much invested here to do that, both here in and Mexico.

      • 0 avatar
        dtremit

        Ah, but the problem is they *haven’t* invested here, despite their protestations. Not in products, at least, as reflected in their sales numbers.

        VW sold about 365k cars in the US last year. That’s already down about 75k from their peak in 2012. Of those, 80k were diesels; you have to imagine pretty much all of those sales are gone in the short term. That takes them down to 285k. If they see a 25% decline among gasoline buyers — again, seems pretty conservative — they’ll end up somewhere near 200k for the year.

        With 650 dealers, that averages out to about 300 cars per dealer — less than one car a day. (To put that in perspective, Toyota has 1,200 US dealers. They sold 428k *Camrys* last year, or about 350 per dealer per year.) A lot of dealers aren’t going to last very long under those circumstances — particularly given the investments VW has forced them to make to prepare for that predicted 800k units per year.

        The Chattanooga plant is only running at about 2/3 capacity building the Passat — and that’s before the effect that the scandal will have on Passat sales. So that’s going to go from asset to albatross pretty quickly.

        They’ve got a much stronger brand in Mexico and points south of there — plus thanks to new FTAs, they can bring those Mexican-built cars back to Europe tax-free. So I don’t think Mexico is an issue.

        That just leaves corporate investments — headquarters, ports, and the like — which are fairly minimal, and shared with Audi. When VW moved to Herndon, the combined HQ staff was about 1400. Audi sales are already half of VW sales in the US; I suspect they can be increased, as Audi actually has product that Americans want.

    • 0 avatar
      Tosh

      Leaving the USA at least shows contrition. Humbly pay your billions in fines, offer to buy back any and all of your cars, go away, figure out Korea-level reliability, and come back in 10 years with worthy product.

  • avatar
    EAF

    I’m the least qualified to speak on this but:

    1. Issue sincere apology to everyone, including non-TDI owners.
    2. Fire the leader & those responsible for the implementation of the cheat.
    3. Fix TDI software to comply with standard & extend owner’s warranty.
    4. Pay fair-market-value for TDI owners looking to trade-in.
    5. Build reliable and dependable vehicles that last beyond lease term.
    6. The word “warranty” has significance, stand behind your product.
    7. Think about the ease of serviceability & engineer around it.
    8. Consider re-naming your company. “Volkswagen” is a stupid name and is synonymous with “cheating over-priced piece of junk throw away tupperware.”

    That just about covers it for me. =)

    • 0 avatar
      pragmatic

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      We apologise again for the fault in the
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      the people who have just been sacked,
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      people had been sacked, wish it to
      be known that they have just been
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      The credits have been completed
      in an entirely different style at great
      expense and at the last minute.

  • avatar
    George B

    Volkswagen needs to make the most of their non-TDI vehicle lineup. They need to extend the warranties of their new 2016 cars to 10 years power train, 5 years everything else. They then need to do very thorough failure analysis to determine what needs to change on their cars so the longer warranty doesn’t bankrupt them. Volkswagen also needs to offer generous trade-in allowances to current owners of TDI diesels.

    The silver lining for Volkswagen is that average buyers avoid their cars mostly due to concerns about time and money spent on repairs, not because these buyers wouldn’t consider a VW. Not that many negative stereotypes associated with their cars except Beetle = chick car and “clean Diesel” isn’t Green. Most people would buy some Volkswagen model if the price is low enough to compensate for the perceived financial risk.

    • 0 avatar
      FreedMike

      “Volkswagen needs to make the most of their non-TDI vehicle lineup.”

      This. +1000

      Gas powered Golfs, Jettas and Passats are darned fine cars. Dress ’em up with some snazzy trim, leave the price where it is, and get some butts in them for test drives – they’ll sell themselves.

      And for the love of God, get rid of the vinyl seats.

      • 0 avatar
        Tosh

        Of course, extra chrome and color-keyed trim and velour all-round! What worked in 1975 will work again!

        • 0 avatar
          FreedMike

          What I’m referring to is the FACT that base Jettas and Golfs are notably bereft of anything resembling upscale trim, particularly when you compare them with other cars in their class. They look very plain.

          Nothing wrong with making jazzing them up a bit, I say. The substance is certainly there.

  • avatar
    Secret Hi5

    Myriad alternatives will make VW’s recovery harder. Which maker will benefit most?

  • avatar
    olddavid

    The previous posts seem to forget that as recently as 18 months past, VW was knocking on Toyota’s door for Number One in the world. I want them to succeed, if for no other reason than showing the world that low labor cost is not the automatic road to riches the rest of the industrial world seems to believe. But, if history is the template, they’re doomed. The internecine war between Peich and Winterkorn, the Porsche stock fiasco and on and on seem to point to a culture unable to recognize the firing squad. This will not end well. And I have no idea what it would take to avoid catastrophe. Suffice to say it will involve buying many shares of their stock back and much expensive triage.

  • avatar
    Kendahl

    The cleanest solution would be a car swap. Bring in your noncompliant VW diesel and exchange it for a new, comparable, compliant car. Your choice — diesel or gas powered. This would take care of the customers, which would improve their reputation compared to what it was pre-scandal, and would solve the problem of what to do with the non-compliant cars.

    Second choice would be a 10 year, 150k mile, bumper to bumper, zero deductible warranty. However, that won’t do anything about the noncompliant diesels they have to fix somehow.

  • avatar
    TOTitan

    VW sales increase despite scandal.

    http://www.cnbc.com/2015/10/01/despite-scandal-volkswagen-sales-inch-up-in-sept.html

    Three days ago I was able to trade in my 12 sportwagen tdi for a 16 golf sportwagen SE tsi for a fair deal. Since 75% of wagon sales were diesel the biggest problem is lack of inventory on the tsi versions. In all of socal I only found a handful equipped and in the color I wanted, and most of the dealers didnt want my tdi.

  • avatar
    cartunez

    Lifetime powertrain warranty for 1st and second owner and 6 yr 90,000 bumper to bumper warranty including wear items.

  • avatar
    walleyeman57

    I have owned 4 VW’s. First car was ’66 Bug bought used. ’81 Jetta Diesel. ’85 Turbo Diesel. ’00 Passat wagon v6 manual.

    The ’85 had a bumper to bumper 2 year unlimited mile warranty. They replaced the seat frame after I bent it doing something stupid. Brake pads at 80,000. Wiper blades -a couple of times. I think they even replaced a headlight. I put almost 90k in two years using in my business. I sold all of the watercooled ones at about 150K miles. Typically, I added up the total repair cost and never thought them worth the continued investment.

    There is nothing that would bring me back to VAG. We now have two Toyota’s that between them have almost 600K miles. There is no oil in my drive. Parts are reasonable. Oh, boring as heck but at this point I enjoy paid off cars that serve as transportation.

    If your needs are basic transportation VAG does not fit the bill. Oh sure they are fun to drive but you will pay for it in the end.

  • avatar
    EquipmentJunkie

    A few thoughts…

    VW dealers held on somehow in the early-’90s when VW sales were only about 80K units for the US. Used cars are probably the best way to do it.

    As much as it is hard to believe, there are still brand-loyal VW people. I count myself as one even though I haven’t owned a TDI for over ten years. I bought two and both provided me with very reliable service. If I was looking for a new car, it would probably wind up being a ’16 Golf.

    VW needs to do what Hyundai, Suzuki, and Mitsubishi did. The specific details will be different, but you have to entice folks into your showroom. A killer warranty, great lease deals, and attractive packages or pricing are great first steps. Remember that it worked for Audi after 60 Minutes nearly killed them.

    VWoA is the most inept automotive manufacturer I know. How can a company so globally strong be so lackluster for decades in the largest market for its products? VWoA repeatedly names their products unpronounceable and forgettable names, ignores or never fills major holes in their product line, and holds onto major sales failures for too long…and they don’t listen to their dealers or their customers!

    • 0 avatar
      87 Morgan

      Those dealers that held on in the 90’s were not required to spend/borrow millions to mak their stores image compliant. Today’s dealers most likely in a lot of cases can’t or won’t hold on till the brand has made a come back. They will go broke long before that trying to keep the lights on.

      • 0 avatar
        EquipmentJunkie

        You are exactly right. I made the same point in a conversation with my father when he said that this dealer was over-reacting. The cash required for those major facelifts are not something that gets paid off in five years. Fortunately for some VW dealers, VW wrote the paper on and paid portions of the building overhauls. (My VW dealer was one of those.) Many dealers were promised the lofty, pie-in-the-sky sales figures of 800K in North America. At those sales levels, the numbers on the facelifts probably worked. I’m not sure if VW ever achieved 60% of that goal, unfortunately.

  • avatar
    Cabriolet

    These articles are getting boring and many posters do not know what they are talking about. I own a VW that is 5 years old and has not caused me one day of trouble. I also owned a MK4 2004 that was also trouble free. Of course i had the 2.0 L that everyone hates but for me was a great motor. I never lost a window or other part on that car but for the stoplight switch. I understand most manufacturers had to replace the same on their cars. I am not happy with what VW has done but i am not to sure the higher ups had anything to do with it. I owned a 2009 TDI which ran like a clock which i traded in on my present GTI. I like VW’s they drive nice and are not tin boxes like other unnamed cars.
    I do not know what VW will do but on my 2004 they send me a letter that the window regulators and coils were under warranty for 100,000 miles or 10 years. Back in 1993/1998 they did have a warranty for 100,000 miles or 10 years. I did own a 1998 and never had to use the warranty but helped me get a good price for the car when i sold it. My dealer told me next month this will be old news and VW has not killed anyone yet. As far as emissions go just look at your local power plant or airport.

    • 0 avatar
      bball40dtw

      You had better luck with Mk5/6 VWs than I did. I loved those cars, but stuff went wrong. The best of the lot was a 2006 Jetta with the 2.5L and the manual.

      You may have had a great Mk4, but most people did not. Those cars had a ton of issues. They had water pump issues, timing belt issues, fuel pump issues, coil pack problems, transmission problems, bad window regulator clips, sagging head liners, sludged engines, and more. They may be the biggest piece of trash that VW ever made. Some owners have reliable ones that live forever, but there are people with 200K mile Lincoln LSs as well.

    • 0 avatar
      Luke42

      I owned a 2001 Jetta TDI, and the transmissions didn’t last as long as the engine oil.

      Worst car I ever owned by a lot!! Worse than the 1980s beaters I had as a teenager, and vastly more expensive to fix. Can’t hold a sooty candle to our Prius, as far as utility goes.

      I liked the Jetta a lot. It was very comfortable and a hoot to drive. But it was a piece of $#!t as far as transportation goes. Pretty driveway sculpture, though. But that car was a wh0re — I got f*cked regularly, and I had to pay for it every time….

      • 0 avatar
        bball40dtw

        MkIVs were TRAAAAASH. Anyone that disputes this is insane. They were great looking cars that drove wonderfully. Unfortunately, they completely disintegrated. The B5 Passat were also pretty looking poop. Those cars have been completely erased from the automotive landscape. I haven’t seen one in years.

  • avatar
    dtremit

    How can they do it?

    Give up the US.

    They’re already abject failures here, and with this development they probably can’t afford to develop the new product they’d need to truly succeed here.

    They need to focus their energies where they have a chance — everywhere but here.

    * Sell the US plant to Subaru.
    * Find new homes for the dealers. Mazda in particular could really use the additional stores.
    * Focus on Audi in the US market; they have product and they’re not tainted by this.

  • avatar
    CoreyDL

    I try and visit my local RAM/Ford/Acura/Land Rover dealer at least once a quarter to see what’s new.

  • avatar
    mcs

    So easy to fix. First, those names like Golf, Passat, & Tiguan have to go. Name them VW-1, VW-2, VW-3 etc. Then, get the US headquarters out of Virginia. Put it some place trendier like SOHO. Next, get rid of the circle around “VW” on the logo and make the logo larger. Problems solved. Next thing you know women will be snapping up handbags with the VW logo on them.

  • avatar
    B.C.

    This is selfish, but:

    GTI Sportwagen. Now, please.

  • avatar
    05lgt

    “This is like a well-respected veteran player on a football team going up to the microphone after a big game and telling everyone that the owner, and the owner alone, completely fucked over the team and the entire fan base that supports them.”
    Wait, did a 49er speak up?

  • avatar
    05lgt

    I don’t get to look at the numbers, but… anyone else wonder if VW’s best US move is to pull out of the US? Any effective cure for all this will be so painful, and the market they have here is so limited. Is there really cheese here for VW now?

    • 0 avatar
      hgrunt

      It’s not that their market is limited here, it’s that they’re not as successful as they’d like to be, and this debacle isn’t helping them at all.

      The US is the first or second largest car market in the world. It would be even worse business for them to pull out entirely, than to try and gain bigger market share.

  • avatar
    blueflame6

    I’ve owned, depending on how you want to count, four or five VWs and this situation infuriates me even though I don’t currently own one.

    In the short term, they’ve got to make things right for the owners and dealers. That probably means some mix of warranty extension, BIG discounts on replacement vehicles for trade-ins, maybe even things like direct payments to owners or buyback programs.

    In the long run, the right answer is to do the corporate equivalent of finding Jesus by going full speed environmental across the board: sustainability, environmental friendly production, hybrids across the line, serious push on electric vehicles with dedicated platforms instead of the e-Golf compliance car, and so on. They also need to start actually listening to dealers and owners and stop doing insane things like waiting years to introduce current models to the US market.

  • avatar
    Chicago Dude

    Call me crazy but I disagree with just about everything here. Most of these suggestions are just variations on how to invite the vultures circling overhead down to peck the company to death. You don’t want those customers. You just don’t.

    No, what VW needs to do is to take advantage of the silver lining in all of this. There isn’t a single dealership right now that will touch a VW TDI, and maybe not even a gas one either.

    1. $2500 owner loyalty bonus.
    2. Accept any VW vehicle as a trade in and price it based on KBB from the day before dieselgate.

    That’s it. There’s a lot of people that either want to or need to get out of a current VW and they are stuck. You are in the position of being the only place to get unstuck, and every TDI you take is one you don’t have to fix and can sell in some part of the world that doesn’t care. It will keep the dealers in business so they are still around when the next manufacturer has some scandal and VW is no longer toxic.

  • avatar
    Tosh

    In a parallel universe, VW would propose to FUND IN PERPETUITY the smashing together of Euro and USA emission AND safety regs into ONE global standards and testing center. And then any VW offered for sale in Germany (or anywhere) would be legal EVERYWHERE. “People’s Car”?

  • avatar
    prabirmehta

    Great article! I think that dealers like Jim Ellis are part of the problem. I bought a VW from them many years ago and that bad experience with the purchase process, service experience and ofcourse the horrible reliability of the car has stuck with me.

  • avatar
    matador

    They need to offer a loyalty upgrade to the owner of ANY VW/Audi product made within the lsat 10 years. Doesn’t matter if it’s a gas-powered A4 Avant or a Diesel Jetta. Offer a huge incentive to get them into a new VW/Audi product, and offer them a very generous warranty. That’s the safe play.

    If they wanted to be daring, I’d recommend the Buickman proposal: Free oil changes to any vehicle at a VW/Audi dealer for any vehicle, regardless of make, provided that you test drive any new VW or Audi. You have people in the dealer, now. If you produce a nice-looking car (VAG does), people will become impressed, and some will become customers. You’ll lose money in the short term, but you’ll gain confidence in the eye of the consumer.

  • avatar

    My TDi is exactly the same car as it was last week. The only difference is VW bombed my resale, but I wasn’t intending to sell anyway.

    I expect VW to do nothing. I know that is cynical, but there are so many cars out there, that they will probably fight regulators at every level and only do what is needed after a long negotiation with each one.

    There won’t be a buy back, no extended warranty, just a lot of cash moved as fines to government entities around the globe. The illegal cars will be grandfathered in, save California, who will probably require the power losing ecu flash…these cars will all end up in non-test states, after the dealers give pathetic trade in values to the victims.

    The 2016 diesel cars sitting on the docks or in storage will eventually be sold in other markets, probably on a break even basis. Ni How, China ?

    I will eventually get a $1500 off coupon for a Beetle Convertible, which will be totally useless to me, and probably non transferable.

  • avatar
    jthorner

    For starters they should at least match Hyundai’s warranty. Hyundai made many terrible vehicles in their early days, and they went all in on a long warranty to take the fear out of customers’ minds.

    It worked.

    VWOA is probably toast though. VW’s problems are deeply rooted in a defective corporate culture, and there is zero indication that corporate culture will be overhauled. VWOA has never shown respect or loyalty to the customers who pay them. Without that, how can they expect to have a stable base of repeat customers?

  • avatar
    bilwig

    Want to fix the problem! Ask your customer what they want and give it to them. In my case, since I just purchased a new car in July, I want a full refund. We can then start over. I am a long term VW owner and if I am to remain a customer I need to hear what VW is going to do for me. I care less about government penalties or recalls etc. Just buy back the car!

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