HERNDON, Va. -

To see where Volkswagen’s upcoming WorldAuto program may have already had some impact on the company’s dealer body, take a look at one particular VW store in Orange County, Calif.

According to the dealership’s used-car manager, Capistrano Volkswagen’s sales of off-brand used vehicles jumped 37 percent year-over-year in June.

And while acknowledging that there may have been a few factors in play that caused such a significant increase, UCM Harry Haber said the WorldAuto program his store was piloting certainly played a role.

The Southern California dealership was one of some 20 stores testing out this rebranded certified pre-owned program from VW, part of which will allow dealers to certify off-brand models that arrive on their lots.

Basically, VW has put its entire used-vehicle operations under the umbrella brand of WorldAuto, which is scheduled for an Oct. 1 launch.
That brand includes the existing VW certified pre-owned program and what the company has dubbed “Quality Pre-Owned,” which gives dealers the ability to certify off-brand product.

“Overall, what we’re doing is rebranding our entire CPO program and adding an element to it. And that additional element is the ability to offer these non-Volkswagen vehicles with a warranty associated with them, like a certified vehicle,” VW’s Scott Weitzman explained to Auto Remarketing.

Meanwhile, the VW CPO program receives new branding, and VW is expanding the age eligibility by one model-year.

“The (VW CPO) program is essentially the same as it is right now, just with new branding,” Weitzman said. “We are also going to add an extra model-year of availability to the Volkswagen program. So we’ll go from the current model year back six years and up to 75,000 miles for Volkswagens. And we’ll do the same thing for eligibility for the non-Volkswagens.”

Going into some of the program’s logistics, Weitzman emphasized that the off-brand element is not identical to the VW CPO piece. The Quality Pre-Owned vehicles will have a 12-month/12,000-mile comprehensive warranty, where VW certified models get 24-month/24,000-mile coverage.

However, the off-brand program will get the typical amenities like roadside assistance and other perks, and the program criteria are the same.

Dealer Feedback

Weitzman also delved into the formation of the program and the input gathered from dealers. He noted that a version of the program has been out in Europe and Asia for about two years.

However, to fit the program to the needs of the U.S. market, VW discussed the program’s concepts and theories with its National Dealer Advisory Council, which has a subcommittee for used cars.

Then the company launched a pilot with about 20 dealers in the U.S., and has been running that since February, Weitzman said.

“We received some feedback on the branding itself, to ensure that we had a consistent message across the program overall,” he noted.

Having tried a few different techniques, VW plans to have consistency throughout the overall program when it comes to things like messaging and branding, schemes and colors, he added.  One element, in particular, that was received positively was the new color scheme in the brand, which Weitzman said is more "vibrant."

Looking at the big picture, Weitzman stressed: “Overall there hasn’t been any negative impact, which is really what we wanted to ensure was the case for the existing program.

“And we found that dealers have had more success in trading in off-brand vehicles since they’ve had this program,” he added.

Offering the feedback of one pilot dealer, Capistrano VW’s Haber said: “The conquest sales that Volkswagen is trying to establish … obviously, we’re seeing some benefit from it.”

And not just in terms of a lift in off-brand sales. Haber said the program is allowing dealers like himself to put more money into trades and retail vehicles they may have otherwise wholesaled.

In fact, that in itself was one goal VW has for the program.

What’s more, a big challenge for the CPO industry itself has been the lack of inventory. With the ability to certify off-brand units, that gives VW dealers the chance to bulk up this side of the business.

“That was part of the idea and part of the timing, at least right now, where our dealers can’t get enough Volkswagens,” Weitzman said, referring to the shortage of CPO-worthy units. “There are just not enough out there to feed them.

“It opens up the funnel a little wider for them to trade in and be more aggressive on these other vehicles, and give them the opportunity to generate profit at the dealership and in the operation,” he continued.

Weitzman added: “At least on the off-brand piece, the idea is to give the dealers, hopefully, a new and more effective way to retail these off-brand vehicles at higher transaction prices than maybe they have in the past. And by offering the warranty … and all the value-adds that you get with a certified pre-owned program, if they can sell those vehicles and retail them more successfully, then they’ll be able to be more aggressive on the trade-ins that come in from the conquest makes and close those deals at a higher rate.

“We want them to be able to do that, so that they can sell those new-car customers,” Weitzman added.

He indicated that “a huge percentage” of new-car buyers bring in trades, and Weitzman hopes this program allows VW dealers to become more aggressive in what they offer for off-brand trades and help seal the deal with those shoppers.

“If they’re coming in with a Honda or Toyota (to trade in) … typically, those Honda and Toyota dealers are more aggressive at putting the values on those trades,” Weitzman shared. “If we can enable (VW dealers) to be more successful in that area — in putting better value on the trade —they’re going to be able to close more of those customers that are coming in to purchase the new vehicles.”