Fleet News

'Sudden' success after many years of hard fleet work

WINNING the Fleet Manufacturer of the Year award at this year's Fleet News Awards was no flash in the pan for Volkswagen. Showbusiness is littered with stars who became 'overnight successes' after a decade of hard work treading the boards. Volkswagen Fleet finds itself in similar circumstances, having invested years in establishing its fleet credentials, only to see its fleet sales 'suddenly' race ahead in the past three years, culminating in the firm being named Fleet Manufacturer of the Year at the 2002 Fleet News Awards.

As the Fleet News Awards' judges declared: 'Listening to the requirements of large and small fleets, responding to tenders exactly as requested and providing clear, consistent and detailed data on model ranges and service, maintenance and repair forecasts should not be beyond the abilities of any fleet department.

'Yet while some struggle to deliver these qualities, Volkswagen's fleet department excels, securing wide praise for its attentive, responsive and highly professional account management.'

The company may have a model range ideally suited to the current company car environment, but there are plenty of rivals who have strong car ranges that do not enjoy anything like the standing of Volkswagen in the corporate sector.

By the end of October, for example, Volkswagen's fleet sales were 14.5% ahead of the same period last year at 69,498 units, a rise ahead of all but Renault and Toyota among the top 10 fleet manufacturers. And in the booming fleet diesel sector, driven ahead by benefit-in-kind tax shy company car drivers, Volkswagen has seen its sales this year fly ahead by 51% over 2001 to 38,937.

Clearly the strength and breadth of the company's PD TDI diesel technology has boosted demand among a corporate market increasingly aware of both the economy benefits and torque appeal of diesel models.

And while the eye-watering 4.9-litre 313bhp V10 diesel unit fitted to the new Touareg 4x4 and Phaeton luxury saloon may showcase the future opportunities for diesel, it's the development of its more prosaic 1.9 TDI unit to deliver between 100bhp and 150bhp which has really caught the eye of fleet drivers and their budget controllers given its 50mpg economy performance.

'The high torque diesel engine is becoming the engine of choice for discerning drivers,' said Vince Kinner, Volkswagen's head of fleet. Residual value forecasters now predict that the popularity of diesel cars in the fleet sector may lead to an oversupply in the used car market in two to three years' time, damaging their residual values.

But Volkswagen insists that the mid-range flexibility, durability and economy of its diesel engines will appeal to secondhand car buyers as much as their company car driving colleagues.

It is initiatives to protect and build on its wholelife costs that have endeared Volkswagen to fleet decision-makers as much as the motivational uplift of offering staff a Volkswagen car. Volkswagen's orderly approach to the new car market and its patience in not forcing new car sales through daily rental have secured solid and dependable residual values.

Kinner says the company could easily increase its fleet market share from the current 7.5% level, but prefers instead to control volumes to protect the investments made by current customers. Leasing companies, the fleet industry's most influential arbiters of wholelife costs, will account for more than half of Volkswagen's fleet sales this year, and the manufacturer has worked hard to make itself easier to deal with for these large clients. It seems amazing that open communication and the early supply of detailed and accurate data should distinguish one manufacturer from another – surely such behaviour should be a given – but the judges of the 2002 Fleet News Awards sang the praises of Volkswagen for its ability to make the complicated task of supplying the fleet sector appear so straightforward.

The manufacturer has certainly reaped the rewards of its agency purchasing programme which sees orders taken and delivered via its retailer network, but invoices dealt with centrally.

'Our agency relationship with leasing companies means our relationship is much closer,' said Kinner. 'They control about 60% of the fleet market and we negotiate our terms directly with them.'

But Volkswagen is also working closely with its retailers to ensure they uphold the same brand values in their approach to the fleet sector. The company has moved away from its policy of establishing fleet specialist dealers on the grounds that company cheque books account for more than 50% of new car sales so every dealer should be interested in fleet.

However, it has nonetheless established five categories of dealer depending on their allocation of cars – with dealers selling more than 600 fleet cars requiring at least five dedicated fleet members of staff.

Overall, Kinner sees Volkswagen's fleet operation as securing the volume to which it aspires, with the right balance between large and small fleets and no over-dependence on one sector.

But maintaining the status quo is not an option as the manufacturer prepares to up the ante with the launch of two 'halo' cars likely to attract the attention of corporate cheque books.

The Touareg off-roader has major volume potential, with Volkswagen pencilling in 3,500 UK sales of the Mercedes-Benz M-class and BMW X5 rival.

The luxury Phaeton saloon represents a technological tour de force to rival the BMW 7-series and Mercedes-Benz S-class, but its volume aspirations are modest at about 200 to 250 units next year and 600 in a full year.

For Volkswagen, however, the Phaeton is about 'raising the centre of gravity of the brand', and Volkswagen Fleet has already raised the centre of gravity of corporate expectations for a manufacturer's fleet department.

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