History and Heritage Merge with Modern PracticesTue, 09/01/2015 - 16:31
Q: How is Volkswagen tailoring its services to Mexico, and which models have been the most successful in the country?
A: The Volkswagen Jetta has the strongest name and image in Mexico, because it is locally produced and it competes in a high volume segment of the market. The Beetle also has a strong presence, with people in Mexico possessing an emotional connection with it because of its history. Right now, the bestselling car we have is the Vento, which is internationally known as the sedan version of the Polo. It is an imported car, but it competes well at a price point of MX$180,000 (US$12,000), placing it in a high volume segment that appeals to private clients as well as fleet customers. Looking at the Mexican market, 47% is represented by small- and medium-sized sedan cars, while the SUV segment is growing quickly. However, if you want to be successful and become a market leader, you have to dominate in the A0 and the A sedan segments. After that, you have to gain coverage in all the remaining segments of the market, starting with small hatchbacks with a price of MX$100,000 (US$6,700), all the way up to vehicles of MX$1 million (US$67,000), such as large SUVs.
Given that the product alone is not enough for our clients, we are placing a huge emphasis on customer satisfaction and after-sales services. Many brands lose a large percentage of their clients in the first three or four years of ownership, so our focus is to have a high rate of after-sales customer retention. The more loyal your customers are, the more profitable the company will be, which also translates to a higher remarketing opportunity. The used car segment is an important area to consider. Historically, Mexico does not have a positive reputation in this segment, which offers a great opportunity for every brand in the industry, especially Volkswagen. A strong used car business enhances the possibility of taking trade-ins for the new cars sold to customers. If you sell a higher percentage of used cars, you get a much greater workshop presence, as well as higher sales in parts and components.
Q: What strategies has Volkswagen implemented to retain customers and boost satisfaction?
A: Our whole strategy for Mexico is to have balanced business operations, with strengths in every key aspect of nour operations, including sales, after-sales, used cars, and customer service. All brands have to accept that business is cyclical and influenced by the economy and the product portfolio. There are phases when the portfolio is new and strong, but there are others when the products are old and weak compared with the competition. Volkswagen has introduced a comprehensive customer satisfaction strategy called the Best Face of Volkswagen, where we apply five fundamental pillars. The first thing we did was to construct a dedicated structure with enough resources, and then we reengineered our sales and after-sales processes with our dealers. On top of that, we established training and coaching programs where we spend approximately 20 days with the dealers, as well as designing systems to help us measure the performance of every dealership. Finally, the addition of a dealer recognition program and an internal program of cultural change, have really helped embed this strategy with our dealerships.
Q: How will the introduction of the Golf 7 help you boost Volkswagen’s presence in Mexico?
A: Golf is an iconic model and is one of Volkswagen’s most internationally recognized products. In Mexico, this model competes in the A Hatchback segment, which represents about 2.5% of the total market. It is a small segment, but the Volkswagen Golf is fighting for market leadership, holding a 25% share of the segment. We will sell approximately 7,000 to 8,000 Golfs a year, so the contribution to our global sales will be relatively small. However, its value for the brand, the image it carries, and the technology and quality statement it implies have much greater importance to Volkswagen. Mexico is the sixth largest market for the Volkswagen Group, with a local market share of 15.5%. China is currently our strongest market, followed by Germany, Brazil, the US, and the UK. The Volkswagen Group has set objectives that are to be reached by 2018, both globally and for Mexico, and we have structured them around customer service, employee motivation, and having the most attractive products in the market.
Q: How will the new production of the Volkswagen Tiguan in Puebla contribute to domestic sales in Mexico?
A: With the new Volkswagen Tiguan production, we have an opportunity to offer a better price for a larger car that properly meets the needs of the Mexican market in the A-class SUV segment. Moreover, this production is a statement of Volkswagen’s commitment to Mexico. Speaking of the market in general, there are many choices out there for the customers, even more if we consider brands that are not locally produced. However, the way clients relate to Volkswagen is strongly influenced by the significant history and heritage we have in this country. Our challenge now is to take the relevant aspects of that history and utilize the emotional connection to create a new market where our values of innovation and responsibility can be adequately represented. The Volkswagen Tiguan will be a car with unbelievable technology and outstanding quality, which will proudly represent the innovative nature of the brand. It will have a highly fuel-efficient engine, it will be manufactured in an extremely responsible way, and it will have a competitive value proposition.
Q: Volkswagen is famous for iconic advertising campaigns, such as Lemon and Think Small. What marketing approaches is the company planning for its new models, and how is Mexico participating in this process?
A: Volkswagen de México is closely aligned with Latin American requirements, giving us a perfect opportunity to have input in global marketing strategies, and adding a little Latin nuance to the campaign. Volkswagen is a people -oriented brand, which is why emotion will always play an important part in our marketing strategies. Nevertheless, the way we are engaging with our customers is also changing, particularly considering the impact of digitalization and social media. We must be even more alert of the clients’ needs, as the strongest brands will be the ones that are capable of responding better through these platforms.
Q: Considering the market differences within the country, how will each region evolve in terms of demand and sales of certain vehicles?
A: The industry and the market are shaped by the Mexican economy, as well as the purchasing capabilities of the economically active population. Mexico is a strong sedan market, oriented toward transporting many people and large quantities of goods. The practical needs of the market have made these cars more popular in the country, with vehicles between MX$120,000 (US$8,000) and MX$200,000 (US$13,300) being the strongest sellers. This is unlikely to change any time soon, other than due to the growing influence of the SUV segment.