Volkswagen launches new marketing offensive

Passat Alltrack marks the beginning of a new campaign to boost Volkswagen's sales in Australia

The Passat Alltrack may seem an unexpected product from a company that already sells two other SUVs in Australia, but it's an idea that has worked well for Subaru in the past. And the Japanese company's entrenched product line has left the door open for a rival, says Volkswagen Australia MD, Anke Koeckler.

Speaking with motoring.com.au during the launch of the Passat Alltrack last week, the Volkswagen chief would not offer any hints on the company's sales projections for the high-riding wagon, but clearly feels it offers real competition for Subaru's Outback.

"We have seen that the [Subaru] Outback right now is just offered in a petrol version with automatic – and we could actually offer the diesel version [of the Alltrack] with DSG. That was the reason why we said there was potential where we can enlarge our positioning for the Passat... and it's additional volume, not substitution."

The Alltrack (pictured) would effectively double local sales of the Passat if it sold in numbers similar to those of the Outback. For the year to date, the Subaru has sold 3514 units – outselling the total combined sales of Liberty sedan and wagon (3412). Volkswagen's total sales of the Passat for the first nine months of 2012 have reached 3782, not including sales of the CC, which is based on the Passat.

Ms Koeckler's reticence concerning a sales forecast for the Alltrack is intriguing. The new Passat variant wouldn't likely overtake the Outback's sales in its first 12 months. But if the market agrees that the Alltrack is a better offering than the Subaru, there is potential to lift Volkswagen into seventh position in 2013, displacing Mitsubishi among the top-ten most popular car companies in Australia.

Naturally, for that to happen, sales of the Outback would have to slow to a crawl and the Alltrack would have to soak up all of those lost sales. So it's an unlikely scenario, but Ms Koeckler certainly has eyes on seventh spot, all the same.

It's a far cry from the company's global ambitions to be number one by 2018, but the Volkswagen brand in Australia could conceivably move at least two or three positions up the ladder during that same timeframe.

"We don't want to be number one in Australia," Ms Koeckler said. "I am always very realistic; we are right now number eight. And the last couple of months we achieved number seven...

"Last year we actually achieved for the first time the number eight position. Certainly there's still actually a lot of opportunity and potential beyond 2012."

Volkswagen has already commenced work on a new marketing strategy to take the brand forward, and it dovetails with the global goal of pushing aside Toyota and GM for the top spot.

"Right now I am working on a strategy... it is all about the strategy for 2018; what do we need, what is the framework, where do we have strengths and weaknesses, where are the opportunities and the threats... what you think of the brand, of the product... fleet, rental car, market communication, used car business... everything."

Mention of sales to rental fleets and the Volkswagen brand in the same sentence somehow seems counterintuitive. It's a plan aimed at exposing rental car customers to Volkswagen product and, according to Ms Koeckler, is a marketing tactic rather than a sales opportunity. Any revenue from selling to rental fleets will be negligible, it seems, in contrast with the cost of promoting the cars to the fleet buyers in the first place.

"Here in Australia it's a great opportunity to experience our product... and my statement is always: 'better experience than explain', when it comes to Volkswagen. If you once have the opportunity to drive a car, you have the 'Wow!' effect. A lot of people have never tried it, because... 'Oh no, it's too expensive...' [That] perception is probably still the case.

"And therefore I am aiming to get more business with rental car [fleets] – but reasonable business; just for marketing purposes, for test drive reasons, to let our customers experience our cars, to have those spots at airports, to have more cars available, [so] that people can try it without any obligation... There's no dealer, no hard-sell."

The company will not approach rental fleets to buy the new up! at this point, Ms Koeckler explained. The tiny hatchback needs to establish itself and its image in the marketplace before the company jeopardises that in the interest of boosting sales volumes by using the car as a marketing tool.

Volkswagen's placement of the up! in Australia has been very carefully orchestrated, with a dedicated showroom located adjacent an Apple Store in Sydney, to give one example.

The cars VW will seed in rental fleets around the country will be the Polo, Golf and Passat, to name three, but the company may have a fight on its hands to usurp Hyundai, which already does a lot of business with rental firms.

"Yeah, but they are doing it for growth..." Ms Koeckler answered. "We are doing it more for giving our customers and potential customers the opportunity to test drive. We always have to be very careful. I can do much more, but it costs – and I don't want to waste money."

The Korean companies in Australia, particularly Hyundai, represent a mounting threat to Volkswagen in certain segments – especially the small car and compact SUV segments.

"Certainly the Koreans have gained importance in the Australian market," Ms Koeckler observed. "They're quite aggressive. They also have good product, but we would certainly do it a bit different. The Koreans are looking for a lot of market share right now – in a [short] period of time.

"I'm not under pressure to do it within five years."

There's a danger in pursuing sales volumes at the expense of any other consideration. Brand image may suffer, but Volkswagen in Australia will try to walk a tightrope between the conflicting needs.

"We have an [aspirational] brand, so we would obviously emphasise keeping the brand on a specific level. I don't want to lose this premium position, which allows us to keep it in between the volume brands and the luxury brands.

"Saying that... where we have some opportunities in the lower segments, I would go for [it]. The up! will give us great feedback [as to] whether we can actually change the mindset of some young people going for a used car... [to] the up! as an alternative... a much safer package and also from a fuel consumption point of view [versus] the competitive set as well.

"So if it comes to positioning, you might not see a revolution, not at all. What we have done successfully in the past will be continued – absolutely.

"Saying that, we will always look [around] the edges, where we can also find some new opportunities.

Volkswagen in Australia places much faith in the Golf 7, the company's new small car, due to arrive here next year. It's already the subject of a new project, ahead of its local launch, and doubtless looms large in Ms Koeckler's marketing strategy.

"I think the Golf Mk7 plays a very crucial role next year, coming into the Australia market," she said. "That's our flagship as you know; the core of the passenger car model range is the Golf – and stays the Golf."

The seventh-generation Golf won't necessarily introduce any radical new tactics when it arrives in the market in 2013. It's important to Volkswagen that the company maintains that balance between market penetration and upmarket brand image. But the smaller Polo is ripe to play with customers' perceptions and, indeed, the company has already commenced massaging the light car's market position, by dropping the three-door model.

"Right now we have to find always the right spot for the products," Ms Koeckler said. "As we launched the up! we [made] some changes in the product positioning for the Polo – and I think the Polo sits pretty well right now, in the market segment... compared to what the other manufacturers are offering..."

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Volkswagen launches new marketing offensive

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