Volkswagen reassures dealers on growth plans for US market

Bloomberg

Volkswagen AG told its dealers that the automaker is still committed to a mass-market strategy in the U.S. and has doubled production of an all-wheel-drive station wagon to challenge the Japanese automaker Subaru beginning the fourth quarter of 2016.
Herbert Diess, global head of the Volkswagen brand, and Hinrich Woebcken, interim chief executive of the company’s U.S. sales unit, met with the dealers on Saturday for 90 minutes during a convention in Las Vegas. “We are working to redefine the Volkswagen brand in the United States bystrengthening our management team, our partnerships with dealers, and ourproduct portfolio,” Diess said. “We want to grow the volume consistently beyond past levels, and we will do this with our partners, the dealers. More than ever, we will include their ideas and their requirements into our decision-making.”
“If there’s going to be a redefinition, it’s going to be price-competitive German engineering,’’ said Michael DiFeo, the dealer principal at Linden Volkswagen in New Jersey, who attended Saturday’s meeting.

Stemming Discontent
Volkswagen is trying to stem discontent among its retailers as the German automaker negotiates with regulators about the fate of about 600,000 diesel vehicles in the U.S. that were rigged to cheat on emissions tests. Volkswagen also faces hundreds of private lawsuits. Last week, U.S. District Judge Charles Breyer in San Francisco ordered the carmaker to come up with a detailed proposal by April 21 to get the over-polluting vehicles off the road.
At Saturday’s meeting, the two sides didn’t talk about how actually to fix the cars or compensate customers, since Breyer had asked the company not to disclose details of talks with regulators.
On Friday, many of Volkswagen’s 652 U.S. dealers met and selected a five-member committee to negotiate with the automaker. Their goal will be to seek compensation for losses stemming from the emission scandal, without resorting to lawsuits. “The dealer body is unified that it’s not in our best interest to take a litigation posture,’’ said Jason Kuhn, chairman of the Kuhn Automotive Group in Tampa, Florida. “These are going to be our partners not only now but for a long time to come.”

Dealer Losses
VW needs to make its dealers whole for financial losses suffered during the emissions crisis because they’ll be the cornerstone of whatever actions the company undertakes to rekindle loyalty among its customers, Kuhn said.
Negotiations between Volkswagen and its U.S. dealers will begin as soon as meetings can be arranged, he said.
Volkswagen’s namesake brand sold 349,440 cars and light trucks in the U.S. last year. In a press conference after Saturday’s meeting, Alan Brown, chairman of VW’s National Dealer Advisory Council and co-owner of two Volkswagen stores in suburban Dallas, said the company needed to sell as many as 500,000 cars a year for Volkswagen and its dealers to make an acceptable profit.