Volkswagen Ireland is pushing ahead with a plan for its commercial vehicles dealership network which by the middle of next years will have seen the number of dealers reduced to 25 from 34, writes Brian Byrne from the Hannover Commercial Vehicles Show 2012.
The plan is part of a strategy to build on and consolidate the brand's recent achievement of top place in the light commercials business in Ireland, where it now enjoys 26.7 percent of the market."The idea is to build up the throughput per dealer and increase the specialisation of the dealerships," says Paul Burke of Volkswagen Commercials Ireland. "This is better both for the dealer and for the customer in terms of being able to properly support the after-care. and make the customer come back and buy again."
Getting to the brand's current level of success in the recession has been the result of a big shift in strategy from the heady days of 2007 when Burke's biggest problem was getting enough product to satisfy demand.
"When everything fell down around us in 2009 we had to reinvent ourselves and we targeted areas such as the fleet business which we hadn't done before."
He's also comfortable with the range of product now available, which he believes is the best he has seen in his ten years working in the commercial vehicles field.
"Caddy is our best selling vehicle in Ireland now. In the boom years it was Transporter, but that was very dependent on the construction industry, which is now only 10 percent of what it was. The Caddy is ideally suited to the service companies, and that business is still quite strong, maybe even growing a bit.
"At this point in 2012 we are sold out of Caddys and there's ten or 12 weeks lead time to get one. It's just a good all-rounder that does its job really well."
At around 9,000 vehicles a year, Burke thinks the LCV market in Ireland has now stabilised and for perhaps the next four years he sees that as the level of business to be maintained. Some of the recent growth in VW's commercial business, he believes, is due to companies finally buying after putting off vehicle change for an extra year or so.
"In some cases it is companies switching from a larger vehicle to a smaller one, which is why the Caddy is doing so well. Businesses that survive are now making more cautious decisions."
The fight to do business in a depressed market has resulted in competitors offering product at prices which arguably leaves them with little or no profit. Burke notes that Volkswagen didn't do that.
"My job over the last few years was to convince dealers to hold their nerve, and we've never gone for selling cheaply. I think we're now benefiting from that, because there's excellent residuals on our products.
"The day you erode the value of a new vehicle is the day you erode the value of its residuals, and that makes your business model going forward very difficult. The ability of your dealer network to trade in new and used vehicles is the most important thing for sustainability and you can't pull the rug out from under them by making them sell at small margins.
"Without a properly supported dealer network, no growth is possible and that's where our focus is now."
