It is a tough time to be either a Volkswagen dealer or a TDI owner these days. Last week certainly didn’t help matters either with the resignation of VW’s U.S. CEO Michael Horn, who was essentially holding Volkswagen U.S. dealers together in wake of dieselgate.
So why did Horn, a 26-year company veteran, leave? And with no fix yet for the diesel emissions problem, what should TDI owner’s do?
RADIO SHOW TRANSCRIPT
Jerry Reynolds: We’re coming to you coast to coast today with a special guest. I’ve been talking to you about this for awhile now and his name is Alan Brown. He is the national chairman for the VW dealer council and Alan I just can not thank you so much for joining us today, there are just so many questions that we have and everyone listening has. How are you doing, sir.
Alan Brown: Man, Jerry I am doing fantastic today, thanks for having me on the show today and I hope you and Kevin are doing well.
Jerry: We are, we are, we’ve been on the road the past two weeks doing Cleveland and New Orleans at their auto shows so we’re happy to be back in North Texas.
Jerry: Alan, let’s talk a little about our history because I want people to know that you and I go way back to when I owned a car dealership, and a string of them, and I first met you when you were washing cars back there on the wash rack.
Alan: Yes sir, I am going to take you back to a name Johnny Hollis hired me to wash cars at Prestige Ford in July of 1990. So you know with me still being attached to Bobby Beck and the Beck family here at Lewisville Volkswagen that puts me just at 26 years in the business and I can proudly say with one family, one group.
Jerry: Yeah and I love that Alan, I always saw a little of me in you. Your work ethic and that sort of thing and I went to Alan at one point and I said what do you want to do the rest of your life. And he said I like this business and I had already made him the pre-delivery manager and that was at a time we were selling 800 cars a month and he had a big job and I made a decision to put him in finance. And I don’t know, you were, 18 or 19?
Alan: I think I was almost 20, so let’s call it 19.
Jerry: And he did great, stayed there after I sold out. And it always makes me feel good for someone who came up under me to go on to be a success. Now Alan as the Chairman of the VW National Dealer Council and I assume it’s the same when I was with Ford and the National Dealer Chairman for two years in a row. They kind of give you the company line to tow. Correct?
Alan: Yes, yes and uh if you listen to some of the media I’ve been in over the last year I’ve always tried to be in the middle, holding hands with the manufacturer on one side of the street, I am holding hands with the dealer and I am really trying to keep everybody together so that we keep the situation as calm as we can and we continue to move forward with what is best for the dealer network and the manufacturer because if they are both winning then the conversation goes a lot easier for both parties.
Jerry: Agreed and I said earlier on the air, I sensed a change in you from the last time we had you on the show a few months of ago. I felt like if you weren’t angry, you pretty darn close to it.
Alan: Yes, so it was time, as I talked to my colleagues on NDAC which is the national advisory council and some of the other councils, first of all I wasn’t going to step out there by myself. I was going to step out there with the true emotions of the dealer network and once I learned very quickly that I had the true sentiment, emotion, worry and concern of the dealer network, it was very easy for me to change my tone and become a lot firmer and more direct with what we need.
Jerry: Well I think it is time, this has gone on long enough. Michael Horn resigned this week he was the head guy over VW in the USA. Did you see that coming?
Alan: Oh you know. Hey. Your show is all about straight talk so I am going to really bring come people under the hood with what truly took place. You know from my vantage point, I spent a lot of time with Michael Horn, and you could really see he was really starting to push the envelop because you now he came from Wolfsburg and that’s why he was so well received from the dealer network over a short period of time is because here’s a German guy who came over here and quickly understood what we needed and went back to Wolfsburg, and I’m talking ladies and gentlemen, pounded, pounded the advisory board on on what change needed to be done and what we had to do different if were we are gonna get in the game in this American market. You know we are such a smart company, yet we have been so ignorant in our approach in America for so long. And so to clean this up a little bit, Michael Horn was asked to transfer to something different within VW, but if you’ll remember at NADA his first meeting in New Orleans he clearly stated “I came on a one way ticket.” That doesn’t mean he was broke, that means he came here not to get promoted back to a supervisory board position at a high level. He came here to root his family and enjoy the fruits of his labor for a long time to come and that’s why he pushed so hard and that’s why when they offered him a different position to step down over last few days, he said, no, the captain goes down with the ship and I will walk away from my 26 years with Volkswagen AG.
Jerry: Alan, in your heart of hearts do you think he [Michael Horn] knew in advance about this issue.
Alan: No, he did not. Michael was so removed and if you remember, I made a very bold stance with the NDAC behind me and basically told the supervisory board the day before they made the decision whether Michael stayed or went –– after Winterkorn lost job — if Michael Horn has clean
Jerry: I’m glad to hear that, because I thought he was kind of the glue that was holding dealers together here in the U.S. Alan, do you have any idea of when we can expect some answers. This thing’s been going on for 6 months. That’s way too long
Alan: Yeah great, great question, it’s the hottest question. If you’ve noticed even any responses from my desk or any other council members, you know we have truly been in the dark. What VW has tried to do is keep this very, very private with the EPA. My feeling is, you know the California CARB gentleman, um I believe he was a judge, he made a strong statement that we needed to have clarity by the 24th. With all the action I’m seeing behind the scenes with meetings that certain individuals are in — I think that’s a real deadline. And I feel pretty good that between now and the end of the month we’ll at least know where we’re going. We might not know exactly specific details on everything, but I bet we have a pretty good feel on exactly where this thing is going by the end of the month.
Jerry: I hope you are correct, sir, I really do because you know, I have stood by VW for many years and even since this started saying you know, oh hey, this is not a life and death situation like we had with general motors and their ignition switch which they hid. But when an issue like is starting to head into the 6-month timeframe, it’s too long.
Jerry: Alan let’s talk about the thing that’s really angered people the most and that’s the loss of value on their cars. Now, we expected that on the TDI’s. It’s just natural when you have this kind of thing drag on so long. But I’m hearing from listeners that say dealers are hitting the low on their gasoline VW’s too, have you seen that?
Alan: Yeah, yeah, you know Jerry what I have challenged uh VW with uh in many different council sessions as of late is you know the customer that we’re seeing that‘s really getting frustrated is the customer that is pinging the market they are looking at Honda, Nissan, some other options and when they do that those dealers really have, one, fear of what they’re trading for and two, passing on that fear in the appraisal to the customer. And we know this because then we see the customer coming back to the VW dealer saying hey I am not taking that kind of haircut, you know I looked outside the market but if you’ll help me with the trade we’ll talk about buying another car. And that’s where we’ve really gotten a good sampling lately with how the market is responding with other dealers viewing the product.
Jerry: You know people – they still love their cars especially the TDIs. The big question I get is do I have to fix it once they tell me they’ve got a fix, and I say in Texas probably not, but in other a lot of other states you probably will.
Alan: Yeah, if you’re in California you probably have no choice and u know at that point, uh, VW is going to have to take it I believe case by case and you know extend the olive branch the best they can with each one of those situations, because you know at the end of the day if we’re going to keep them on the road we’re going to have to make them right.
Jerry: Have ya’ll lost any dealers and have any dealers gone out of business or have any dealers just closed.
Alan: You know, we’ve had some dealers hit the reset button on their business plans, obviously myself and Bobby Beck as you know, you know we had just a blessing situation with a wonderful partner in Rick Hendrick. But we were 50/ 50 in that big Frisco store that we had 28 million dollars in and uh you know obviously we’ve got 12 miles away Lewisville which is well-rooted and I’m calling you from today, the Bobby Beck Lewisville Volkswagen that we’ve been at 15 years. But you know Rick Hendrick said it best, he said gentlemen I think you are better off in your Lewisville store owning 100% of that and I’ll take on this big monster because I have the whereforall, because that Frisco deal could bleed you and Bobby quickly. So you know we were blessed that we have that kind of partner with that kind of liquidity. But uh, there are a lot of struggling dealers out there and a lot of dealers that are worried. And that’s why obviously I took the stance I have in last 48 hours in the media and that’s the true voice of the dealer that I am sticking up for.
Jerry: We tend to focus on just the events that happen in the U.S. This is going to be expensive for VW worldwide.
Jerry: Can they survive it?
Alan: Yes they can survive it. Believe me I’ve asked some very hard questions behind the curtain, they can survive it, but if you notice for the first time, you know the chairman of the works council came out in Wolfsburg AG and basically said this american deal please be gentle with us because it could cost jobs worldwide. I mean it is really starting to even impact the liquidity of a company the size of VW.
Jerry: Boy I guarantee you and I worry about it – I don’t think anyone wants to see anything happen with VW. But it’s going to take years for them to overcome this in my opinion.
Alan: Yes and you know if you’ve read lately I am very strong on the volume strategy. We can help VW get back on track, but they’ve got to listen to the U.S. dealer about getting in the game with volume that will also give back to the American public. It will get us on the right side on residual values with refreshing our product correctly.
Jerry: Alan in 60 seconds tell us what consumers should know right now.
Alan: Well, consumers should know that VW does have the ability to make it right and stay patient. I believe, I believe that you hang on to your car and let’s figure out exactly what the fix is going to be and what VW is going to do. I do think there have been people who’ve jumped on class action and that’s up to them I’m not here to give legal advice. But I believe that we’ve got to let VW show their hand all the way before we jump to any conclusions. That’s my best advice.
Jerry: Well, I think that’s darn good advice and I’ve been telling people that same thing. I think there’s going to be nice compensation for those owners that stick it out. They’ve still got a great car. They’re still getting great gas mileage and I think if they will stick it out – especially loyal owners are probably going to be well taken care of by Volkswagen.
Alan: Yes, sir.
Jerry: Alan Brown, VW national dealer council chairman, thank you for joining us today. Alan’s given us a lot of insight.