Hammer Time: How Can Volkswagen Save Themselves?

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?