Volkswagen Promises Dealers It Will 'Rebrand' In The U.S., Doesn't Say How

Good Morning! Welcome to The Morning Shift, your roundup of the auto news you crave, all in one place every weekday morning. Here are the important stories you need to know.

1st Gear: Trust Us 😉

The most-screwed in the immediate aftermath of Volkswagen’s Dieselgate crisis are the automaker’s U.S. dealers, which are suffering from lagging sales until a fix is implemented and didn’t exactly have a big-selling lineup before this happened.


So at a meeting at the National Auto Dealers Association convention last week, VW brand chief Herbert Diess promised to “redefine” the company in the U.S., but was light on specifics about how to do that. And thanks to a gag order, he was mum on the details of the actual fix too, reports Automotive News. Here’s what the dealers who attended the meeting had to say:

Instead, VW’s executives stuck mostly to the product talking points, reaffirming longstanding plans to launch two key crossovers next year and pledging to boost production of some models to support sales in 2016, according to dealers who attended.

Some dealers looked at those comments as a reassuring sign, but others felt the executives missed an opportunity to show that they grasped the severity of the crisis facing some dealers and the brand itself.

“I would title the meeting ‘We’re working on it,’“ said Steve Kalafer, owner of the 17-franchise Flemington Car & Truck Country group of dealerships, which includes a VW store in Flemington, N.J. “There were no promises other than broad statements that we’re working on it and we’re doing our best. This is nothing more than more of the same.”

There were apologies, but they were “somewhat muted,” Kalafer said. “I think they’re tired of apologizing.”

One dealer suggested VW reinforce the idea of “price-competitive German engineering,” but that’s what they’ve been doing the past decade anyway.


2nd Gear: Lexus Dealers Push Against No-Haggle

Since last year certain Lexus dealers have been experimenting with a no-haggle car pricing experience. The idea is to woo younger buyers who might go to CarMax or TrueCar to avoid the pain of haggling over price. But dealers, of course, aren’t too crazy about being told to do this, reports Bloomberg:

“Many of our dealers, philosophically, are opposed,” Jeff Bracken, group vice president and general manager for Lexus, said Thursday ahead of the National Automobile Dealers Association convention in Las Vegas. “They’re saying, ‘You’re wholesale. We’re retail. Stay out of our business.’”

[…] About 44 percent of consumers don’t want to negotiate the price of a vehicle, a surveyby car-buying website Autotrader found last year. While respondents said haggling was their top frustration, most said it’s the only way to get a fair price, so 56 percent were committed to duking it out.

3rd Gear: The Next Big Score

Arguably the hottest startup sector to be in these days is autonomous driving tech, especially after General Motors snagged Cruise Automation for a reported $1 billion. What’s next? Here’s Automotive News:

With the ink still wet on GM’s purchase of Cruise Automation, a San Francisco startup working on autonomous-driving technology, early-stage investors and entrepreneurs in Silicon Valley and beyond are chasing the next big score.

The acquisition of Cruise, rumored to be worth more than $1 billion, signals that automakers, historically wary of high-priced technology deals, may now see them as necessary to avoid falling behind Google and Uber, which aspire to offer self-driving cars that can be summoned from a smartphone.

“It’s unusual that you’d have that large of an acquisition of an early-stage company,” Steve Goldberg, a partner at Palo Alto, Calif., venture capital firm Venrock, said at a March 23 conference in San Francisco on the business of autonomous vehicles. “I think Cruise is an indication that [automakers] think they don’t have the expertise, so they’re willing to acquire technology and keep it proprietary.”

4th Gear: The Fit Is Go (For Another Recall)

Honda is a company in a sort of comeback mode at the moment, and part of that recovery is addressing some quality issues that have plagued them over the past few years despite being traditionally synonymous with “quality.”

But first, it’s got major recall No. 6 to deal with on the Fit, this time related to fires, Bloomberg reports:

Honda Motor Co. will conduct at least the sixth round of major recalls involving its top-selling Fit compact in less than three years, as the Japanese automaker struggles to move past the quality woes that contributed to a change in chief executive officers.

The company will recall 164,388 Fit cars after reports of six fires related to an engine control systems flaw, according to a Japan transport ministry statement. Two reports of collisions are prompting a separate recall of 118,715 Fit cars and Vezel crossovers over a power steering defect.

5th Gear: Can Genesis Succeed?

I was a big fan of the Genesis New York concept at the auto show with which it shares a name. But Hyundai has had a rough go of things lately, with a smaller SUV lineup than some competitors and lower transaction prices. The Genesis luxury brand can help, but Hyundai faces an uphill battle getting it set up right, reports The Detroit Free Press, quoting brand manager Erwin Raphael:

Genesis will focus on a handful of key attributes to establish its identity, Raphael said.

Design. “We’re going to be driven by design. Good, aggressive, cutting edge design.”

Expertise in steel and other materials to create striking shapes and very rigid structures that deliver rewarding handling and comfort.

Interior look and feel, particularly through the use of high-end materials.

The sales and service experience will be key, but Raphael won’t talk about it beyond saying, “We want our customers to feel engaged every minute they spend with us.” Genesis will roll out its plan for the look and feel of its corner of Hyundai dealerships this spring.

Hyundai’s plan to sell Genesis from the same dealerships as the mainstream Hyundai brand runs counter to other luxury brands, which have their own dealerships and showrooms to coddle buyers.

“It’s not easy for a sales network to have one foot in the mainstream and one in the luxury market,” Noble said. “It’ll be hard to establish a separate identity for Genesis in the same building as Hyundai.”

Reverse: Vive La France…

Neutral: How Does VW ‘Rebrand’?

It needs more, better priced SUVs, but those won’t be on the way for another year or so. What can VW really do to come back?