Saturday, August 1, 2009

What's Holding Back VW's Move Up-Market

Their dealerships.

As some of you know I recently purchased a new Infiniti G37x. The second runner-up: the Volkswagen CC. I looked at about a dozen other cars in making my decision and by far in the entry-level luxury sedan class, IMHO these are the cream of the crop. In another post, I'll probably give you my view on all the cars I looked at.

But back to the VW. Between the CC and the G37 both cars had their strengths and weaknesses. And it's easy to make a case for either car. But part of the car buying process is also the environment that you enter: the dealership. In this area there is a huge gap between the two companies. Infiniti is emblematic of the experience you expect from a luxury car dealership, although I'd say that it still lags behind the standards set at Lexus. But VW, is just a car dealership. The vast majority of their buyers and cars that they sell are not targeted to luxury buyers. As such the facilities and staff don't support the luxury experience you're buying when you spend somewhere in the neighborhood of $40K for a car.

Now I'm not just talking about leather sitting areas and offers of bottled water. It's deeper than that. I went into 2 VW dealerships as I made my evaluations. One was a relatively nice, clean dealership, the other kind of small, dark with a epithet-ridden, chain-smoking sales person. Nice guy, but extremely rough around the edges. The sales person at the 'nicer' dealership still had a distinct "car salesman" feel to him. But what's worse is that at neither dealership did anyone in the place no how to get my iPod to work in the car that called out iPod integration as a key feature. Now for me iPod integration was a key decision criteria because I spend so much time in the car and listen to my iPod all the time. What was even stranger about this is that the CC seemingly shared the same MMI interface that the Audi A4 had, which worked flawlessly and easily. But I digress a little.

So at the end of the day you have no different of a buying experience than you'd get at a Chevy dealership, very limited knowledge of the cars by the sales people, no niceties like free loaner cars when you bring yours in for service -- yet you're being asked to plunk down (at least for me) a lot of dough for a car that genuinely competes with cars by Infiniti (and in my mind superior to) Acura, Audi, BMW and Cadillac If the CTS drove the way it looked it would be in my driveway).

This also takes me back to Volkswagen's first attempt at hitting the luxury market, the 2004 $100K luxury sedan with a W12 engine that competed head on with the BMW 7-Series, Mercedes S-class and the Audi A8 on which it was based. At that time, and even today, who would buy a $100K VW? What's crazier is that it looks like they're bringing the Phaeton back in 2010 of 2011.

But this brings me back to my original question. Does VW really think that their existing dealers can support the full brand experience that people are looking for when they are going to spend up to $100K for a car? It just sounds crazy to me, but they seem to be doing it. And let me reiterate, this has nothing to do with the quality of the cars themselves. The CC is a beautiful, well performing car (although stupidly has a sunroof that only tilts up).

Why VW doesn't learn from Honda, Toyota and Nissan and create a luxury brand (Acura, Lexus and Infiniti respectively), with a separate dealer structure to support the move upmarket? Oh wait, they have. It's called Audi. I don't get it.

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