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Protecting the brand

9th April 2009, Page 20
9th April 2009
Page 20
Page 21
Page 20, 9th April 2009 — Protecting the brand
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Which of the following most accurately describes the problem?

IF ONLY everything was as unreliable as the economy... With CV sales in rapid decline, manufacturers are shifting their plans and lowering expectations off the hack of what has been a record few years for the industry in terms of sales However, such a dramatic fall wasn't spotted by most, coming rapidly and without warning, while the results have meant an entrenching of positions and the drawing up of new battle lines.

For a firm like Volkswagen, currently third in the UK's light CV sales charts with a market share of 8.8%, 2009 will be a significant year, according to its LCV director, Simon Elliott.

He says: -We'll be monitoring the market; it's not a case of setting your annual forecasts and waiting until the end of the year for confirmation.

"We need to be loyal to our customers and maintain a positive brand message."

So is VW expecting declines across the market? "Being part of the VW Group, with all the brands under that banner, you get a handle on where the passenger car market is heading. Although CVs are separate, there are still similarities, so, based on the information we have, it's expected we'll see it down by about 23% or 24%," Elliott replies.

Established relationships

A pretty hefty drop then, but not one that's out of keeping with the current set of figures from industry pundits. In fact, some are even predicting declines touching 50%, and this seems to be ringing true, according to figures from the Society of Motor Manufacturers and Traders (SMMT).

However, in these uncertain times, there are still opportunities to be had for the savvy manufacturer.

"We're not looking to grow our volume," Elliott maintains, "but we are looking to grow our market share. We grew from 8% to 8.8% last year, so we're looking at 9% for this year."

Elliott adds that consolidation is the name of the game, with a need to maintain established relationships and offer that extra service that makes customers come back. But he also sees a shifting landscape in terms of how the battle will be fought.

"Historically, the rental market has been important for all brands, but there's a struggle to sell used vehicles, so it's not prepared to take more on," Elliott says.

"What we also have to refrain from is forcing the market if they (rental) haven't got a market themselves.

"If they're struggling in that market, then why should we force something down their throat?"

Getting a good deal

The above approach, though, is not one that's being observed by several rivals. argues Elliott.

"If you spend £10,000 on a van, the guy might believe he's getting a good deal, but the 5,000 that were sold three months before on the general market at fleet prices have destroyed that asset.

"There are people telling us that there are a number of brands that they won't buy anymore because of the way they're distressing the vehicle value."

Elliott asserts that this means VW has to make sure it doesn't fall into the same trap. "I think they're confusing the market rather than stimulating it.

"Brands like us, Mercedes-Benz and Ford are not going down that track. But others are, because they're not getting any rental business, they're passing that through to the rest of the market.

"We're working closely with Glass's Guide and CAP to show we're taking a mature approach to the market."

Elliott doesn't mention any names, but he claims this is because there is too much stock on the ground as =lain manufacturers are overly committed to the rental market.

Meanwhile, what does Elliott think the future holds for new technology? He reckons it will be a mixture of improved diesel technology combined with improvements in tyre technology and aerodynamics, just like in VW's recently unveiled BlueMotion concept for its Caddy and Crafter, along with alternative fuels.

"We have a gas-powered Caddy that is available now. If we don't, then another manufacturer will.

"And eventually, our BlueMotion will be a standard option. You've got to balance the initial vehicle with the fuel economy benefits. A decision should be made by end of the year for BlueMotion. We're also looking at the RPU pick-up. The plan is to bring it in for 2010." •


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