Is VW Really Ready to Rock?

It was one of those things that caused me to spew my morning coffee out my nose in a sudden spasm of laughter, as I read the latest auto news four years ago.

With tears streaming down my face, I struggled to regain composure and finished reading the article from December 2007.

Volkswagen had just announced it intended to overtake Toyota in global sales. Now bear in mind, this was before the Toyota recalls and the collapse of the Western economy.

I often have referred to VW as the old Detroit Lions of the car business. You can always count on them to fumble the ball.

Here we have an occasionally great auto maker that repeatedly has tripped over its own arrogance and self-importance at the highest corporate levels back in Wolfsburg, Germany.

Every time it has had a shot at the title, it repeatedly has blown it, failing to understand its customers and markets.

The VW mantra always has been, “This is way we do it in Germany; the world will adapt to us and our cars.” Apparently, we also must adapt to the bizarre, barely pronounceable names of vehicles, such as the Touareg, Routan and Tiguan.

The antics of VW management have been reminiscent of bumbling cartoon-like caricatures. But it gets better. They’ve announced a 5-year plan to throw $86 billion at product development, production and expansion.

Are these guys serious? Actually, they are dead serious. Not only is VW challenging Toyota while it is just coming off the ropes, heck the German auto maker also has put General Motors, Ford and Honda on the fight bill. VW’s goal is to be the global sales leader.

And you know what? Despite some of my criticism and fun-poking, I think it might have a shot at it.

I was encouraged by statements made by Rainer Michel, VW vice president- product marketing and strategy in the U.S. operation, who says good riddance to the stubborn attitude that the customer is wrong. Is VW actually admitting the customer may be right?

But, and there’s always a “but” with these guys, what troubles me is a statement by VW marketing guru Tim Mahoney, recently of Subaru. He claims German engineering resonates with consumers.

That’s nutty, considering VW has been getting its butt handed to it by Japanese engineering for decades. Why doesn’t VW talk about “American Built” in its new Tennessee plant?

VW has been building momentum. It has great product and improved quality. I could write much about the positive things that are happening with Volkswagen, its product, vision and new customer-centric attitude.

Today, it seems poised for success, assuming it doesn’t do something stupid and fumble the ball again.

But here is where I foresee huge logistical problems that may derail the plan: Volkswagen does not have a big enough dealer body to support a surge of volume sales.

VW’s goal is to sell 800,000 vehicles in the U.S. by 2018, compared with 256,830 units delivered last year. It has 588 stores. The company says it will add more, but it would have to add a lot, and fast, and then run with the big dogs.

Many VW dealers, great friends, are slapping high-fives because it looks like their ship finally is coming in. But VW dealerships mostly are low-volume boutique stores.

Certainly not every one of them is a quiet place. But most of those I’m familiar with currently are incapable of handling the amped-up rock ’n’ roll car business found at GM, Toyota, Ford and even most Honda dealerships.

A sudden leap to high volume is not possible without major changes. Most VW dealerships aren’t ready for a major paradigm shift in aggressive sales, marketing, processes and organization.

I’m pulling for them, though. Let’s see if they can hold on to the ball this time.

Jim Ziegler, president of Ziegler Supersystems, is a trainer, commentator and public speaker on dealership issues.