FN: Fleets have increased their replacement cycles since the initial recession. What pressures does this place on manufacturers?
AS: We see it as an opportunity. Yes, cycles have lengthened but we were less exposed because our vans are very reliable so we already appealed to fleets that had longer replacement cycles.
We are winning business with fleets like BSkyB which wanted to go to a five-year cycle.
Our average cycle is just under four years but we have done a larger proportion on 36 months contract hire in the SME market. However, this is down to us being able to promote great 36-month contract hire rates. These rates have encouraged some fleets to move from outright purchase to contract hire.
FN: Do you cross-sell between cars and vans, and what lessons can your van operation take from the car division?
AS: There’s co-operation but it’s striking a balance between integrated solutions and specialisation. We also cross-sell across all the Volkswagen Group car brands .
The strength in the car business is robust practices, especially on the service side.
We have an opportunity to develop further service elements that are commonplace in cars, such as timed appointments and first-time repair rates.
What’s most significant about Volkswagen’s rise to second in the best sellers’ list is the fact that it has come with just three van models, and each has contributed.
Since 2007, Caddy’s share of the market has risen from 9.5% to more than 21%; Transporter has increased from 15.5% to more than 20%; and Crafter is up from just under 5% to 5.2%.
Total share of the market has risen from 9% to 12.49% so far this year (15.17% in the fleet sector).
Despite Smith’s assertions that Volkswagen is not keeping too close a watch on its new position in the sales chart, it will face growing competition for business particularly from Mercedes-Benz which has ambitious growth aspirations of its own with next year’s arrival of the Citan.
However, with supplies of Amarok, the fourth model in the range, now flowing more freely, Volkswagen expects to take greater share of that market.
And with its van centre network providing high levels of service and top quality aftersales support, Smith is confident that Volkswagen will continue to win more fleet business.