DAVID FURLONGER: Crossing the Ts and dotting the Cs

Volkswagen (VW) has its SA product marketing down to a T. There’s the Touareg, Tiguan, T-Roc, T-Cross and, shortly, the new Taigo.

In the VW lexicon, “T” signifies an SUV, combining elements of road and off-road cars. In SA, as in most of the world, SUVs have gained massive market share in recent years.

Of course, there’s more to VW than one letter. In SA, locally made Polo and Vivo cars have been market leaders for years. Golf remains a familiar sight on the roads, albeit it in smaller numbers than in the past. For customers who want to “C” something bigger, there are people and goods carriers like the Crafter, Caddy, Caravelle, California and Kombi.

But there’s been something missing, says Steffen Knapp, head of the VW brand in SA (the local company, VWSA, also oversees Audi). That something is a bakkie. True, the Amarok has been around for some time, but only as a double-cab leisure vehicle.

Later this year, the company will launch a full range of single-cab “workhorse” Amaroks for business and industry. 

They will be built in Tshwane by Ford SA, off the same production line as its own Ranger bakkie, in which it has invested nearly R16bn.

Bakkies have a special place in the SA motoring psyche. Knapp calls them “a culturally defining product”. He believes that by plugging VW’s market gap, a full range will give him the tools required for his strategy to make the brand SA’s “first choice in automotive mobility”.

That title arguably belongs to Toyota for now. VW has always competed on equal terms in the passenger vehicle market but never with its rival’s bakkies, minibus taxis and trucks.

Knapp recognises that having the right vehicles is only the first step in his strategy. He also wants VW to be the most “aspirational” of SA’s high-volume brands. In other words, it must be the ambition of consumers to own a VW.

That ambition needs a boost. In-house market research shows that though 70% of VW owners say their next vehicle will be a VW, less than half follow through. The rest buy other brands. It doesn’t help that only about 26% of owners trade in their vehicles through VW dealers. The more who do, the more chance dealers have of selling them another VW. “We need to keep customers in our ecosystem.”

Knapp says VW and its dealers must combine to provide an unmatchable ownership experience. Keeping customers is not only nice to do; it also has financial consequences. It has been estimated that the marketing cost of attracting a new customer from another brand is three times as much as retaining one you already have.

Knapp says: “We want to have the strongest customer connection and loyalty.” Between brand, dealer and customer, “we want to be a family”.

That family is becoming increasingly far-flung. Everything automotive used to happen physically through the dealership. Today, initial contacts and “window-shopping” are likely to be online. Indeed, the whole purchase transaction can take place without a customer visiting a dealership or even sitting in the car.

There may not even be a purchase. Among some customers, notably young people, ownership is giving way to usage; people want to pay only for the time they use the car.

On the plus side, new technology allows brands and dealers to remain in touch with customers — old and new — through digitalisation. “It gives us instant connection,” says Knapp. “People welcome it, as long as they feel we are adding value.”

Human connection is also important, which is why Knapp is concerned that 57% of dealer sales executives leave each year. That means there’s a good chance the person selling you a car is relatively new to the product. The constant arrival of new staff does not engender a family atmosphere.

“We are examining multiple initiatives, like advanced HR strategies, to keep our staff,” he says.

Other initiatives to improve the dealer experience include the appointment of dedicated sales staff for corporate customers.

New challenges will keep coming. Unlike many of its competitors, VWSA has so far not tried to sell electric vehicles (EVs) in SA. It has brought in test fleets to gauge the interest of potential customers, but, as a high-volume motor company, is not interested in selling three or four EVs a year, as some companies do.

He says it will wait until it can sell at least 500, and preferably 1,000 — a situation he thinks could be possible within two years. The government has been painfully slow to announce an EV incentive strategy, but Knapp says it has made clear its support for the idea.

Volumes aren’t the only consideration. The lack of electric-battery charging infrastructure in SA is a deterrent, but the bigger issue for VW is residual value — how much cars are worth when owners sell them on.

One of the selling points for VWs is that owners are likely to get much of their money back. EV buyers will expect the same security, but so few have been sold that there is no clear residual picture yet. “We need guaranteed future values,” says Knapp. “Our customers expect it.”

Despite his misgivings about some market challenges, the VW brand starts from a position of strength in SA. Market research comparing VW brand reputation in Germany and SA shows the latter is in a healthier state. Of about 500 people surveyed here, 87.1% found the VW brand attractive, 84.5% thought it signified high quality and 81.2% found it trustworthy. In Germany, 75.7% agreed on quality and 60.8% on attractiveness. Only 49.9% considered VW trustworthy.

That’s because a few years ago, in an incident known as “dieselgate”, the VW parent company was found guilty of falsifying claims about the cleanliness of diesel exhaust emissions. The scandal, which has led to prosecutions and billions of euros in penalties, was huge elsewhere but caused barely a ripple in SA.

“VW has been in SA for 70 years and is perceived as a local company,” says Knapp. “For some people, ‘dieselgate’ might as well have happened to a different company. We have a huge well of goodwill on which to build.”​