US Volkswagen dealers revolt amid turmoil – USA TODAY
Volkswagen dealers are revolting over the sudden departure of their popular U.S. CEO, compounding the German automaker’s troubles amid a sales slump triggered by an emissions scandal.
Nearly six months after the crisis erupted, Volkswagen dealers are airing their grievances over the automaker’s failure to fix scandal-plagued vehicles, U.S. CEO Michael Horn’s exit and a disappointing product lineup.
Alan Brown, head of Volkswagen’s National Dealer Council, said in an interview that VW dealers have invested $1 billion in recent years to upgrade their showrooms but now believe that the company has fostered a culture of “mistrust.”
“I’m telling you that the dealer network is becoming very, very, very frustrated very quickly,” Brown said.
Brown said VW must take quick action by maintaining subsidies that have propped up dealers during the sales slump.
“If not, we will die on the vine,” he said.
Brown is traveling to Germany on Sunday with a dozen VW dealers to urge the company’s top executives to attend the National Automobile Dealers Association conference in Las Vegas in three weeks to reassure dealers of their commitment to fixing the brand’s American problems.
“We’ve got to start getting to a place where we can trust each other’s word,” Brown said. “I’m not going to Germany to look at cars, my friend. I’m going to Germany to get hard answers, and I’m going to Germany to convince Volkswagen that NADA is your only shot to glue this all together.”
For Volkswagen dealers, frustration peaked with Horn’s surprising departure Wednesday, which the automaker described as a “mutual agreement.”
Horn was popular among the company’s 652 U.S. dealers for improving communication, fighting for the American market in VW’s Wolfsburg headquarters and favoring retail sales over less-lucrative sales to rental car firms and commercial customers.
Horn — who testified before Congress last fall about the scandal but has not been implicated — has not commented publicly on his departure.
But Brown said Friday that Horn told him he was offered another job with the company but declined to accept it. Horn, according to Brown, “had his dream job.”
A Volkswagen spokeswoman declined to comment for this story.
VW brand sales have fell 10% from September through February, compared with the same period 12 months earlier, according to Autodata.
Volkswagen admitted in late September that German engineers had installed software designed to beat emissions regulations on up to 11 million diesel vehicles worldwide. The company subsequently halted sales of all diesel vehicles in its U.S. lineup, which typically accounted for 20% of sales, and increased discounts substantially.
In the wake of the scandal, Horn championed a plan to subsidize U.S. dealers to bolster their profitability amid flagging sales.
NADA, an interest group that rarely speaks out against individual automakers, issued a statement Thursday describing Horn’s departure as “a significant blow to the VW dealer network, which has been operating in crisis mode for more than six months.”
The group said the “scandal has not only negatively impacted dealership profitability due to a limitation of product available to sell, but, more significantly, has severely damaged the reputation of the brand in the eyes of consumers — damage we all know could take many years to overcome.”
Brown urged Volkswagen to continue providing financial assistance to U.S. dealers through the rest of 2016 and said it’s critical to accelerate the introduction of a new sport-utility vehicle to breathe new life into the automaker’s car-dependent lineup.
“The discretionary funds that they’ve been giving the dealer network in a lot of cases is the difference in making a profit and not making a profit,” Brown said.
NADA urged VW not to reverse its longstanding plans to invest in the U.S. market, which global CEO Matthias Mueller has said remains an important part of the company’s roadmap.
Mueller is expected to outline a new global strategy for Volkswagen in the spring.
“A critical step in this recovery will be for VW to honor the future product plan that Mr. Horn and VW dealers fought vigorously for in Wolfsburg,” NADA said.
Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.