Critics of VW Sales Strategy in South Africa and USA

The biggest critic of any car maker should be its customers – you and me who buy the cars. It becomes very troubling when an insider suddenly becomes the most vocal critic of a big brand, such as Volkswagen’s Bernd Osterloh. It’s American subsidiary has began a strategy that could accelerate US sales of Volkswagen’s popular hatchbacks and sedans to just over one millions units sold per year. The problem however, is that the strategy of VW USA has not gained any traction. Instead, the opposite has happened. Here in South Africa however, the situation has been the exact opposite. New cars sales grow better and better, and second hand Volkswagens for sale are pushing the company’s profile forward.

While VW may have an exceptionally brilliant range of cars, they do lack what’s really needed in both the American and South Africa market. Let me explain. At the recent Detroit Auto Show, a writer from Bloomberg’s BusinessWeek magazine revealed he heard industry insiders saying VW was egotistical, expensive, and boring, indeed “not the type of brand associations a marketer might shoot for.” Volkswagen’s shining star in South Africa is the Polo and the Polo Vivo. There’s no doubt the Golf and Jetta are superior vehicles, but they’re a bit too pricey for the average South Africa car buyer.

In 2010, VW introduced the Amarok. This was their answer to Toyota’s Hilux and Ford’s Ranger, which have dominated the market for bakkies for a very long time. In December 2013 alone, the Hilux and Ranger’s unit sales where about 10 and 5 times [respectively] more than those of the Amarok. Car reviews all round rate VW’s offering as a great bakkie, but it’s just not finding love from SA’s 25% market share of the car buying population. And similarly, in the United States, where bakkies or trucks as they call them, are very popular. This is more reason that shows American officials are lacking the right vision for the future.

The VW Jetta and Passat compete for the same pockets as the Toyota Corolla-buying population. The Jetta is the Golf’s sedan version, but it just doesn’t get the right numbers to propel it past what Corolla can sell in just one month (on average). In December 2013, the sales of Corolla where over 3 times more than those of the Jetta.

And again in both South Africa and the USA, VW doesn’t have a formidable compact SUV. Over the past few years, there has been a significant increase in the number of sales for this segment to justify the roll-out of a model. VW’s German rival, BMW, gave us the X1 a few years ago, which unfortunately has since been a failure on the sales front. It’s given way to the likes of the Nissan Juke and Ford’s Kuga as an entry-level big car. Some may argue that as a VW division, Audi’s Q3 is the parent company’s entry into this fast growing segment. This may be true for profits, but it doesn’t do much for VW’s own brand value, whose sentimental value is partly what makes us buy their cars. More investment needs to go to the VW Tiguan.

There might be a lot of bashing for Volkswagen, but it is still the world’s third largest car maker by sales, and once the world’s largest company by value during the not so distant dark days of the world economic crisis. Today, the Polo and Polo Vivo are unchallenged as South Africa’s most popular cars. Whether you visit a dealer for a new one, or get a second hand Volkswagen on or any other online platform, Big Blue dominates. The strategy in South Africa is working overall, and Americans would do best to look at the example which we have set.