Volkswagen Customer 'Care' Implosion

Sometimes you wonder what real people think and what affects them.  Here's an example of how car a complete lack of acceptable ethics directly torpedoes sales.  It's not good enough to have a sexy-looking product, or the best marketing. You also have to be an upstanding corporate citizen, and you need to support your customers. Otherwise ... well, keep reading.

I get hundreds of e-mail from people who want independent advice on new cars. Over the past few weeks I've helped a visitor to the site, Angela, who was on the cusp of buying a Skoda.

Then she heard about the Volkswagen DSG fiasco. If you're in marketing, this is a superb case study into how corporate behaviour undermines sales and marketing, and how clued-up modern consumers are.

Here's the e-mail exchange: 

Angela: Hi John, I would appreciate your advice on obtaining the best price for a Skoda Octavia 90TSI DSG lift back. I have visited the sole Skoda dealership in the ACT and been quoted a driveaway price of $25,000. However, a quick visit to carsales suggests many interstate dealers are selling the same car new for up to $5K less. A friend was in the market for an Octavia last year and managed to haggle the same dealer I visited down to around $20,000 - for a station wagon! I am aware the new Octavia will be released in Australia in late 2013, so it would seem likely the handful of Skoda dealers in Australia should be pretty keen to offload the current stock over the next few months. My questions for you are:

1) Should I expect Skoda dealers to be able to drop the price as much as Toyota/Hyundai/ Mazda given their share of the market is significantly lower?

2) As the above Asian cars tend to come with five-year warranties, is it reasonable to expect Skoda to match this?

3) Psychologically, it seems much harder to push for a better deal given both I - and the salesperson - know they are the only Skoda dealer in Canberra. Do you have any suggestions on negotiating when the dealer knows you aren't on your way to meet with the competition as soon as you step out of their yard? Many thanks for your time. Angela.


Me: Hi Angela, thanks for your questions.

  1. Whether or not a Skoda dealer drops the price is related exclusively to how motivated they are to sell a vehicle now, not to the brand's market share. You need to find a dealer that is desperate to make a sale (easier at the end of the month, if the car is in stock now at their showroom) then you need to make a lowball offer and make it firm, not wait for them to make a generous low offer. Say: "My limit is $20k - I can't spend a cent over that or my [husband/boyfriend/parents] will kill me." (Always abrogate the responsibility for a spending limit onto someone who is not present at the dealership.) 
  2. Only Hyundai/Kia and Mitsubishi come with 5yr warranties. Everyone else is 3yrs/100,000km.
  3. You're not locked into a Canberra dealer. Use the hi-tech miracle of the internet. Locate all the Skoda dealers in NSW and Vic as well, send them all an e-mail (basically, an abbreviated tender document). Say you're looking for a current Octavia 90TSI DSG Liftback, tell them your colour preferences and spending limit as well as your purchase timeframe. Don't mention your location - supply only mobile and e-mail contact details. Await response. Easy. You can get it registered in the ACT even if the winning tenderer is in Qld…

Best regards, and let me know if I can help you any further. JC

Angela: Hi John, a quick update on my Skoda situation.

I took an Octavia for a test drive last weekend.  After mentioning my $20K drive away limit, the dealer offered me the demo car for that price.  It has 300kms on the odometer and comes with just under 3 years warranty. The salesman sent me a follow-up text message yesterday to see if he could help any further and offered to ‘see what he could do’ with the price.  I was happy with the $20K price but given he is indicating he can bargain further I am wondering whether I should make another lowball offer i.e. $18.5K or ask for some extras (e.g. mud flaps, floor mats, Media Device Interface) to be added and keep the price as-is.  Any thoughts on what I should do?

Also, my mother is in the market for a new car as well.  She likes the Holden Cruze and the Toyota Ascent.  Are there any things she should consider when looking at these two? 

Many thanks for your assistance. 

Kind regards, Angela

 MeHi Angela,

The bargaining gambit in this case is the honest one (in part). He's opened the door to sharpening the price; the least you could do is walk through it.

Say: "I really wanted the (blue/green/obsidian) one with (multimedia/mats/saxophone holder). But I'll take this one if you do me a really sharp price and throw in (some sexy extras)." See what he comes back with.

Regarding your mother: I wouldn't buy a Cruze if my life depended upon it. I would give up Osama B. L.'s home address (123 Paradise Central; big house full of virgins...) before they did that to me. Check and see how many fire risk and other defects that car has had - and they're just the publicly acknowledged ones. 

Buy the Corolla or the Mazda3 instead. She'll be much happier. JC

Angela: Hi John, Thanks for your reply.

I took your advice, sharpened the deal, got a few extras thrown into the mix and paid a deposit on Saturday.   Then I arrived home to see your Total Recall segment and I felt ill.  While I had heard about the DSG recall on the news I was not aware of their special treatment for customers raising legitimate problems with their vehicles.  Although I was extremely pleased with my dealings with Skoda Canberra and sad to cancel my order, ethically I knew I did not want Volkswagen Australia (under any banner) to receive a red-cent of mine.  Thank goodness for the three-day cooling off period! 

Keep up the good work and thanks again for all your assistance. Angela.