Auto Dealer Monthly, February 2014

ON THE POINT Volkswagens Audi brand has been a quality leader in its segment for years but the VW marque has not fared as well according to the latest rankings from J D Power The author believes the OEM will have to reconsider its U S marketing strategy to make further gains in sales get writers block and struggle to come up with something to write about that will educate and entertain my readers you can always count on VW to do something so totally absurd again that youll never run out of material Th ey havent let me down yet Last week I was interviewed by a Reuters reporter looking for a comment on Volkswagen Th e story made the press worldwide Despite reports to the contrary I never said that any former or current Volkswagen executives had agreed to appear in the remake of the movie Pee wees Big Adventure Th ose rumors are false Th ose of you who have followed my rantings know I have actually been very optimistic about VW in recent months Recently they seemed to be on track to surpass Toyota and General Motors as the worldwide sales leader But as I have said many times you can always count on Volkswagen to fumble the ball at the goal line I give them credit for their No 3 ranking worldwide but their performance in the U S still has plenty of room for improvement Th ey have totally misread our market First they built their entire campaign around their use of German engineering despite the fact that J D Power ranks them 23rd out of 33 brands Th en we saw VWs spokesman Mark Gillies forced to stand in front of another press conference and say Were making good progress on quality but there is more work to be done Is it just me or is it embarrassing when the best thing you can say about your product is that warranty claims are dropping You guys and gals got all puff ed up and full of yourselves again over the last few years Yes sales have surged but at a time when the Japanese were beset by natural disasters and major recalls and the Detroit Th ree were climbing out of or avoiding bankruptcy Now Europes economy is in the toilet and the competition is back and formidable in the middle price ranges You might ask how VW could be struggling with quality issues when their Audi product has become the standard benchmark for the upscale luxury market Well heres a clue It probably has something to do with the fact that to 10 AUTO DEALER MONTHLY FEBRUARY 2014 reduce costs and ultimately prices they started delivering austere cars with austere features and austere interiors Not to mention those God awful names they put on their products What exactly is a touareg It sounds like some kind of foot fungus Americans are buying bells and whistles and technology German engineering has nothing to do with it Th e Reuters Bloomberg article in which I was quoted also featured a quote by London based analyst Arndt Ellinghorst who said VW executives are so deeply in love with their over engineered cars that they simply havent been taking U S customers seriously Heres the Jim Ziegler translation You got cheap and you got caught You were on a roll and you blew it again Now Chrysler has joined in the fun with a Dodge commercial that says Were willing to bet no kid ever grew up with a poster of a Passat on his bedroom wall True but Mercedes Benz did have to bail out Chrysler aft er a series of dismal failures and the Italians eventually had to step in to save the company I think that pretty much says it all PHOTO COURTESY AUDI USA TURBULENCE AHEAD When was the last time you brought in an expert for a complete legal compliance audit of your dealership When dealers complain that those guys charge thousands of dollars I always answer the same way Okay how prepared are you to pay a 250000 fi ne to the Federal Trade Commission or go to prison Th ats oft en followed by Hey Jim weve been doing that for years and weve never had a problem Look it doesnt matter how long youve been getting away with an illegal practice if getting caught one time will ruin your life Th ere has been a lot of activity recently by the FTC the FBI and other agencies enforcing advertising laws and fi nance compliance Powerbooking is a major target on their radar screens I know of at least fi ve cases from 2013 in which dealership managers and staff members have been arrested for this illegal practice At least one of them is facing substantial prison time and fi nes Th e charges in these cases include falsifying trim levels options and equipment on vehicles as well as