Fleet News

Kinner gets set for new fleet leader

THE Golf is Volkswagen's big corporate seller and head of fleet Vince Kinner can't wait to get company car drivers behind the wheel.

It would appear that the roof is falling in on Volkswagen UK. Literally. Visiting its Milton Keynes headquarters to talk about the launch of the new Golf and life at the firm generally, the first challenge is to avoid the building work going on to repair the ceiling.

Ducting and wiring safely negotiated, I find head of fleet Vince Kinner in better condition than his roof. There are a number of reasons for this, but the imminent arrival of what will be his biggest-selling fleet car and the solid sales performance of 2003 are the two main ones. Also helping are the two titles won at the 2003 Fleet News Awards, including the prestigious Fleet Manufacturer of the Year Award.

Firstly, Kinner wants to look forward to the Golf. The fleet strategy for the car will take a similar approach to the design and engineering in Wolfsburg: more of the same, nothing experimental or radical. It's a result of the enviable position the Golf holds, with its cast-iron image and legion of dedicated followers.

So Kinner is looking forward to getting the car into fleets at the end of the month. He said: 'In terms of fleet, Golf is a very significant car for us because it's our biggest volume seller in the sector.

'To some degree we're going to focus on the fleets that already have Golf and see if we can maximize our share.'

However, Kinner is not expecting Golf to hit the same levels in 2004 as the old model did (even in its run-out year in 2003, Golf sold 55,000 units) because not all engines will be available when the model is launched. But the Golfs that will sell to fleets will be the higher-end, more profitable models, and in particular, the diesels.

'In the past, 45% or more has been GT spec and higher and there's a much richer mix in fleet and so the fact that we've got a range that now starts at S rather than the usual entry-level E doesn't really bother us too much.

'S will only be 14% of the mix, which is unusual for that sector of the market. We have the richest mix of models.'

The new Golf is better-specced than ever, Kinner claims, and he gets rankled by accusations that Volkswagen products are sparse compared to the competition.

He said: 'That's an old prejudice and I think that's not been true for a few years, but we're going to have to go a lot further to remove the prejudice that people have about this.

'People have said for years that Volkswagens are under-specced but we've had items for years that other people don't have: airbags all over the place for example, where others have only fitted one airbag. I think it's a little unfair and the new Golf will go some way to changing that perception.'

The Golf has always had an almost unassailable position when it comes to wholelife costs, due mainly to the fact that its residual values are as dependable as a Jonny Wilkinson drop kick, but Kinner still isn't satisfied. He thinks the industry underestimates the Golf.

'The residual values that have come through so far would suggest that we are going to remain best-in-class, in the 40% band. We have this debate continually with the price guides that the Golf is the one car that consistently outperforms its guide price. We believe it is outperforming guides by as much as 14% on a regular basis,' he claimed.

'Why? I think it's very difficult for the guides to cope with a brand like Volkswagen. We've drawn attention to it with CAP and they've said they will go away and look at it more carefully, and I don't think they were even aware of how much it outperforms the guide by. If you look at Ford Focus, that outperforms the guide by a couple of per cent. To be 14% out means there is something very wrong.'

When it comes to price, Kinner makes no apology for the higher cost of Volkswagen products at the front end: 'The pricing issue is something Volkswagen always faces and we've always said we are never going to be the cheapest in the sector.

'There's always a premium to pay for Volkswagen. It depends on how much of a premium people are prepared to pay, and in the case of the new Golf it's no worse than the old car.'

And Volkswagen's position, perceived as marginally more upmarket than the other volume brands, means that in fleet it attracts more user- chooser drivers than most manufacturers. User-choosers often mean business for the leasing companies and this is an area where Volkswagen is very strong. This brings with it its own set of challenges, both for the leasing firms and the manufacturer.

Kinner said: 'Leasing companies manage our performance. To many leasing companies we are their number one brand. They wouldn't buy any more product than they currently buy from us, and that in itself brings problems because they have to dispose of them after three years, so they will manage our performance within their fleet to something they feel is acceptable.

'By that we could be taking 20% of their purchases when we only have a market share of 7.5% and that gives them a feeling of anxiety that 20% of their fleet is Volkswagen. We know they deliberately manage us back by using price to adjust their portfolio.

'I don't mean to sound negative. It is remarkable how much we take of the leasing industry's purchasing and if that were a true reflection of the fleet market, then we would have a much higher market share.

'If you take out the bits of the market you only influence by price, then we are in the top three, and that's reflected in leasing.'

Volkswagen ended 2003 in fifth place in the fleet sales tables, dropping by only a few hundred vehicles on the year before at about the 80,000 mark, when many of the top 10 saw big drops. Kinner was pleased with the result.

He said: 'We're within a thousand of the year before, and we're hugely pleased with that. Bearing in mind our biggest volume vehicle is in run out, to maintain that is fantastic.

'Nor do we spend the same level on fleet support that our competitors spend. The budget for the whole year would probably be less than one of our competitors spends in a month and yet we are still one of the top three or four brands in the market.'

The first half of 2003 was rocky for Volkswagen, with the well-publicised problem with ignition coils affecting a number of its petrol engines, and Kinner is pragmatic enough to accept that lessons had to be learned to claim back its reputation as one of the most reliable vehicle builders.

He said: 'Customers do have problems, cars do go wrong but it's how we react. The feedback we get from leasing companies is that we are one of the quickest to put it right.

'The coil issue caught us by surprise. If we went through a similar circumstance again, we have plans in place showing how to deal with the problem if there's a fleet out there running a lot of our cars.

'We should be there ahead of problems and that's what it means to be a Volkswagen customer.

'I think that the expectation of customers when they buy Volkswagen is so high that when something does go wrong, they feel let down.

'At a European level we are definitely getting better, but we're not happy to stand still and particularly in fleet we think we can be more proactive. To be a good fleet supplier, we have to be great at what we do.'

So a new Golf and a new roof. 2004 is going to be a big year for Volkswagen.

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