Frankfurt 2015 / VW: A small SUV could lift us to 10% share in France

September 19, 2015
Matt Gasnier
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Arnaud Barral

After Audi and BMW, here is the third catchup with a German brand I had the privilege to organise at Frankfurt. Volkswagen may be losing foot in China, but in its European fief volumes are as high as they ever were, with the brand even placing three nameplates within the European Top 4 for the first time in history in August. We meet with Arnaud Barral, Volkswagen Brand Director for France. A very laid back and honest interaction, that started with Arnaud interviewing me…

Arnaud Barral: So what you do with BestSellingCarsBlog is specifically sales data analysis?

BSCB: Yes we cover 190 markets and publish a monthly analysis for roughly 60 countries.

Arnaud Barral: That’s massive! So basically you know sales data better than me…

BSCB: But we’ll only cover France for this interview…

Arnaud Barral: Um yes but still… This is going to be funny…

Volkswagen unveiled the new Tiguan in Frankfurt.

BSCB: What is your analysis of Volkswagen France sales performance so far in 2015?

Arnaud Barral: The overall French market is at +6%, correct? (BSCB: correct) It is still pulled up mainly by tactical sales however, with private sales starting to recover over the past 3-4 months which is great news. We follow the market at +6% also, and in private sales we are at 8.6% gaining 0.4 point. So our growth is healthy. In terms of financing, LOA (Location avec Option d’Achat – Long-term lease with Purchase option) is growing exponentially and now represents the majority of financed purchases at Volkswagen. We have also noticed that it improves our customers’ loyalty to the brand, so it is very beneficial for us.

The second angle we have is we often do limited offers to boost traffic in our dealerships and to demonstrate that VW is more affordable than you think. We remain very prudent in terms of tactical sales: we don’t do rentals, demo sales or 0km used cars for example, and we want to deliver a stable and profitable performance so we are focusing on company and private sales in the context that they don’t damage our pricing. Our policy is not for a growth at all cost, but a healthy growth protecting our margins. This policy is 4-5 years old, what really has changed recently for us is the LOA surge.

VW Touran R-Line and VW Passat Alltrack

BSCB: Getting into the detail by model, which successes are you the most proud of, reversely which models do you think need more work?

Arnaud Barral: Firstly our pillars are doing well: the Polo is going very well (BSCB: +7%) and the Golf is doing correctly while being challenged by a very valuable competitor in the Peugeot 308. We already have 2.000 orders for the new Touran, the Tiguan has a solid end of life for this generation (BSCB: -13%) and the Passat is a full house (BSCB: +76%). On the other hand I believe we could do much better with the Up. We are at 4% market share in that segment, we should aim at 6%. 3 years after launch, the Up is not established yet as a nameplate and we have an average legitimacy in this segment after our past struggles with the Fox. It’s a rather discreet car that doesn’t have the sex-appeal of its competitors, such as the Fiat 500, Mini or the French (new Twingo, C1, 108), however we think it will age gracefully, so we are counting on this durability to improve our performance in the long run.

BSCB: Staying on the Passat success for a bit, in August you outsold the segment leader the Peugeot 508 by 5 units. Is your objective to be first in class with the Passat?

Arnaud Barral: No. It would be pretentious to aim at outselling the French, however we can approach them. To me August sales are irrelevant as this is a very atypical month. In the segment this year, the 508 is at 34% market share and we are at 17%. We are a solid #2, and this suits us very well. For Passat we are at 75% of registrations to companies, and among private sales a lot are LOA as described above.

Little cannibalisation of Golf sales: the Sportsvan.

BSCB: Now that Golf and Sportsvan sales are separated in official French data, the Golf looks weaker and the Sportsvan excels (#42 in 2015). Do you see Golf cannibalisation by the Sportsvan?

Arnaud Barral: The Sportsvan is particularly successful with private buyers, as a complement to the Touran in our MPV sales. There is probably a little bit of cannibalisation of Golf sales, however Sportsvan volumes are lightyears ahead of what the Golf Plus was doing, and when adding Golf and Sportsvan we are in very positive territory vs. one or two years ago. So the Sportsvan really nails a specific segment of buyers that want an MPV that doesn’t really look like one. If the Golf Plus was a relatively small car without a huge habitability, the Sportsvan is a drastically different vehicle, a true compact MPV: the severance is here and explains the sales surge.

BSCB: What will bring Volkswagen to 10% market share in France?

Arnaud Barral: The answer is crystal clear: a small SUV to compete with the Renault Captur and Peugeot 2008. This segment now represents 14% of the French market, and most importantly customers that buy into this segment have absolutely no hesitation towards it: they want a small crossover, with an elevated position and an adventurer look. We don’t have any. We can therefore not reach them at all.

BSCB: On this, can you confirm a Polo-based SUV will come in 2018?

Arnaud Barral: I cannot confirm this with certainty, what I can say is our product planning eventually ends up with one SUV per segment, including the segments equivalent to the current Polo and Golf.

As a Bonus Track I give you a selection of snaps from the Berlin Volkswagen Concept Store, courtesy of Guy Thompson:

VW Sport Coupé Concept