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Volkswagen's Dealers Want An End to the Madness

Aside from Volkswagen, the hardest group hit by the diesel emission scandal are Volkswagen's dealers. With the departure of Volkswagen of America's CEO and President this week, something has snapped in dealers and they want answers.
Posted: March 12, 2016 - 12:50PM
Author: Will Maley

The diesel scandal is the latest in a long line of issues and fears dealers in the U.S. have with Volkswagen. From mismanagement in allocations of vehicles to dealers investing $1 billion in new facilities to prepare for ambitious sales goal of 800,000 vehicles in 2018, only to see sales drop within the past three years.

"There's no way to spin it. It's a disaster. And it's created by Germany," said Matthew Welch, general manager of Auburn Volkswagen to Automotive News.

This weekend, twelve Volkswagen dealers will be heading to the annual Open Day at the company's headquarters in Wolfsburg, Germany. There, the dealers will be speaking with senior executives with the goal getting firm commitments on Volkswagen's strategy in the U.S., product launches, and sales goals in writing.

Alan Brown, head of VW's national dealer council and one of the people heading on this trip says if they don't get this, there could be a heap of trouble at National Automobile Dealers Association convention later this month.

"We've got to stop the insanity. By NADA, we'd better have our business plan in writing to our dealers and have a very clear understanding on where we're going, or we're going to lose control of our dealer network."

What are fueling these fears?

A fair amount of this comes from comments made by Volkswagen brand chief Herbert Diess back in January. According to Bloomberg Business, Diess wondered aloud at a meeting with dealers at the Detroit Auto Show of whether the company should stop trying to compete with the likes of Toyota and return to being a boutique brand, selling higher end models.

“It was near crickets in the room,” Brown told the magazine about the response from dealers.

Why are these issues coming up now?

As we reported earlier this week, Volkswagen of America's CEO and President Michael Horn stepped down. Horn was liked by dealers for his view on Volkswagen's situation in the U.S. and worked hard to improved the situation. He is credited for shortening the lifecycle for Volkswagen's vehicles and lobbied for certain models like the Golf SportWagen Alltrack to come to the U.S.

Horn also helped dealers whether the diesel scandal mess by instituting a number programs such as the buyback of used diesel vehicles.

"I've been a VW dealer almost 10 years, and he understood the American market better than any of [his predecessors], and he had the ability to get things done better than anyone else did," said Fred Emich, a VW dealer in Denver.

With Horn out of the picture, dealers lost a key ally and are left wondering what happens next.