Earning the right, every day
Some jobs, you might think, are just a case of turn up for work, grab a coffee, put your feet up and watch the orders come tumbling in. Certainly it might seem like that from the outside looking in at Volkswagen Fleet. An unending supply of quality new cars, residual values with a healthy glow across the board, customers who default to the brand time and time again, and a leasing industry keen to sell your products for you. What could possibly go wrong?
I put this scenario, rather mischievously, to head of fleet Michael O’Shea. It’s not a world he recognises though.
‘We have to have zero complacency. Every day, every week we get up and ensure we maintain, defend and grow our position. We constantly have to earn the right to be on a company car policy, we have to earn the right to be on a user chooser’s shopping list.
‘The competition keeps us on our toes. There’s always somebody looking to take your position so as soon as you think you’ve done it and are arrogant or complacent your days are numbered. But we have our own internal drivers and try and grow market share that are right for our business.’
Part of the reason that life isn’t as easy as it might seem for Volkswagen is that it holds a unique position in the market, its brand sitting above most of the volume players, yet still more affordable than the premium competition. So instead of having it all their own way, O’Shea reckons they cop it from all sides.
‘The market place is very challenging due to a number of factors. It might sound a bit glib, but we have pressure from volume and premium all trying to compete with us.
‘What we’re experiencing as a brand is the growth of premium brands from a true fleet perspective. Those brands now have around a quarter of that volume, but in 2006/7 they would have accounted for 15%, so clearly they are more active in the market and Volkswagen is clearly a target of theirs.’
But despite the pressures, Volkswagen is holding its own. It sold 104,000 cars in fleet, and retains a strong position, just over 9% of total fleet market share but crucially 11% in true fleet.
Cars such as the Golf perform an incredible job for the brand, as O’Shea explains: ‘One in five cars, or 20% in the hatchback true fleet segment is a Golf, whereas A3, 1 Series and A-Class combined are at 33%, which shows you just how strong our car continues to be.’
Much of that is down to the leasing business, through which up to 90% of Volkswagen fleet sales are channeled. But again, O’Shea is keen to stress it’s not a case of launch a car, and let other firms get on with selling it for you.
‘The leasing sector is massively important, and a critical relationship for us and with those companies we have made a really conscious effort to try and work closer with them, giving them greater clarity on brand strategy, to ensure we can align our strategy with their strategy. We have to be clear of their and our goals around the various sub-channels within true fleet, such as corporate, SMEs, public sector, whichever, because for us there are distinct channels and some leasing firms will have a stronger position in some of those than others, and what I have been trying to do is line all that up to then see where there’s a mutual opportunity to optimise the performance.’
A lot of work is done by his sales team, O’Shea claims, ensuring that the end users are getting the right cars at the right price, so that the leasing company can then supply them.
‘I have to make sure my team are going to the end user companies and that they are positioned right, in the right choice lists with the right specs. We’ll then create a situation where there’s an end user agreement but we have got to be 100% clear on our strategy and make sure the leasing companies are clear on our alignment with the end user.
‘We have to keep a close eye on RVs too, because even a couple of percentage points’ difference at a leasing company could mean a £15 a month difference for the end user, which could knock a particular car out of a particular choice list bracket and that could mean significant volume opportunity missed. So that’s that kind of attention to detail that we strive for.’
Currently, the eighth generation Passat is occupying his and his team’s mind, and although that market is shrinking, O’Shea says Volkswagen has broadly managed to hold its share and because of the huge leap in quality, it might be time to take the fight back to the premium brands, and customers who have grown tired of smaller, lower spec executive saloons. It seems that Volkswagen is most definitely not resting on its laurels.