VW Group: the next step
The Volkswagen Group diesel emissions scandal has been grabbing headlines since it broke in late September and will continue to do so as internal investigations are conducted and legal actions are pursued to discover just how rogue software was deliberately fitted to 11 million 1.6 and 2.0-litre diesel engines to falsify emission readings under test conditions.
The ramifications for the individual brands are immense as trust has been broken and previously unblemished reputations tarnished. But what does it all mean to fleet managers who will be looking after the practicalities of making sure affected cars are modified with minimal disruption and downtime?
What we know is that the rectification work will begin in January and will run through the course of 2016 with VW Group already saying that some slippage is expected into 2017. Officially this is not a recall because under UK law a ‘recall’ relates to an urgent safety issue that requires immediate action. Instead this is rated as a ‘service action’ which can be completed over a longer period of time but is not safety related.
The scale of VW Group’s job in the UK is enormous with 1.2 million models across the VW, Audi, Skoda, SEAT and VW Commercial Vehicles brands fitted with the Type EA 189 diesel units. A high proportion of these vehicles, sold since 2008, are run by fleets ranging in size from SMEs to blue chips as well as contract hire and daily rental operators.
We haven't seen anything like this in the UK and Volkswagen Group is now working hard behind the scenes to make sure the rectification process is seamless as this is its big opportunity to rebuild trust and confidence.
This, of course, means that each brand’s dealers are now in the frontline when it comes to managing the practicalities of the process and rebuilding relationships.
Paul Willis, managing director of Volkswagen Group, shed some light on what will happen next at his grilling before the Commons Transport Select Committee in October.
He described his brands’ dealer networks as the “backbone” of his business. These are big operations which collectively employ 21,000 staff and have made substantial investments over the years to represent each brand. Dealers can be forgiven for also feeling duped by the emission fixing shenanigans as they have sold and serviced the affected vehicles in good faith; having them on-side from the outset is paramount.
“In the coming days my team are meeting with all the retailers to see precisely what we need to do next,” he told the committee.
“Of course we could not exist without our dealers, our retailers are the backbone of our business, and therefore it’s really important that we look after them and support them. They’re at the forefront of the pressure and questions from customers and its absolutely imperative that we work with them and help them.”
Willis clarified that around 400,000 cars fitted with the 1.6 diesel engine would need alterations to their fuel injectors as well as software changes. While those with the 2.0-litre engine will only require software updates. There's already suggestions that the more involved work could take between five and 10 hours, although we're still awaiting the final clarification from VW Group.
Willis said vehicle owners affected by the recall will be offered loan cars by their dealers while their vehicles are being fixed.
Fortunately the latest Golf, a user-chooser fleet favourite, has been sold with the newer EA 288 engines since 2012 and is therefore unaffected.
Also with Euro 6 compliancy becoming mandatory from 1 September the Volkswagen Group brands, in common with other carmakers, had been phasing out their older Euro 5 units.
But what does this all mean to customers who had previously favoured the VW Group brands.
According to Robert Forrester, CEO of Vertu Motors, one of the UK’s biggest dealer groups, the long term impact may not be as damaging as initially thought.
“The broad sentiment is that customers want to trust the Volkswagen Group. They want to believe the best of the brand,” he said.
Vertu, which trades as Bristol Street Motors and Maclin Motors, represents all the VW Group marques but Forrester said there had been no “significant decline” in sales across the affected brands, although he did confirm that Volkswagen had taken the brunt.
Dealers now have a job to do to build bridges with customers and restore lost confidence. They know that second chances will not be forthcoming and if they do not deliver exceptional levels of care these customers will walk away come renewal time.
Brands would normally dream of welcoming 1.2 million customers into showrooms, the challenge now facing VW Group dealers is to turn adversity into opportunity.