Volkswagen of America Reveals Fleet Strategy for MY-2024

On June 26-27, Volkswagen of America held its 2024-MY fleet preview at its corporate headquarters in Herndon, Va. This year’s meeting, “Revving Up for 24,” was attended by 75 fleet professionals representing commercial fleets, fleet management companies, and daily rental, along with other fleet suppliers.

It was VWoA’s first in-person fleet meeting since the COVID-19 pandemic. In addition to a business meeting, the VW 24-MY fleet preview featured product presentations and model walk-arounds that also included an accessories showcase and update on the latest safety features in the VW product lineup.

Specific to the commercial fleet market, VW discussed fleet allocation volumes for MY-2024, its commercial fleet incentive program for MY-2024, the latest courtesy delivery initiatives, and an update on electrification developments with charging points, battery manufacturing, and upcoming new BEV models.

VW Commercial Fleet Strategy

Volkswagen has prioritized North America as one of its top-10 growth areas with 90% of its product needs now met by its manufacturing plants in the North American region.

“This means that there will be more investment in our portfolio, not only in electric vehicles but also ongoing strong investments in gasoline-powered vehicles,” said Raghu Iyengar, director of CPO & remarketing for Volkswagen of America. “The higher priority assigned to North America will give us a greater say in design, which means the development of more U.S.-centric vehicles.”

In this overall environment, VW is targeting its total sales (fleet and retail) to grow 25% in 2023. According to VW, its growth is being accelerated by the greater availability of more SUV and BEV models.

“From model-year 2022 to model-year 2023, VW had a 138% increase in commercial fleet sales,” said Raghu Iyengar, director of CPO & remarketing for Volkswagen of America.

“From model-year 2022 to model-year 2023, VW had a 138% increase in commercial fleet sales,” said Iyengar. “During this time, we cycled our rental volume to the commercial business, It was a concerted effort on our part because of the loyalty of the commercial business. And it is an effort that we will continue. We are not going to stop until we get to 10,000 vehicles on the commercial side of the business. We will get back in the rental business next year, but responsibly.”

For model-year 2024, VW will increase by 9% its allocation of units earmarked to the commercial fleet market.

“Building a trusting, long-term relationship has been our mantra to success,” said Iyengar. “We had zero MY 2023 orders cancelled,” said Iyengar. “And we more than doubled year-over-year volume into non-rental fleet.”

Iyengar was very proud that VW had zero fleet order cancellations in 2023 for commercial fleets and made this point several times during his presentation.

VW will offer a commercial fleet incentive program for MY-2024 vehicles . As done in MY-2023, VW will offer an additional early order bonus for orders received by July 31, 2023. In addition, VW will offer a volume bonus discount if the total fleet order exceeds 100 vehicles for model-year 2024.

Total cost of ownership for preventive maintenance is reduced with a two-year pre-paid maintenance. “Also, maintenance expenses are reduced due to the extra year and additional 14,000 miles from a new-vehicle bumper-to-bumper warranty that is for four years/50,000 miles,” said Iyengar.

To further strengthen its appeal in the commercial fleet market, VW has launched a new project focused on improving courtesy deliveries. This includes establishing a pool to secure vehicles from an on-hand pipeline to fill fleet orders for faster delivery. VW says its enhanced reservation process includes guaranteed delivery of new vehicles within 90-120 days. In addition, VW has increased the amount paid to VW dealers for courtesy deliveries.

Another rollout consideration in the 2024 model-year is the installation of special QR code in commercial units for drivers to scan with their phones to obtain product-specific digital content. According to VW, the installation of the special QR code will have a slow rollout starting with MY-2024 deliveries.

During the fleet meeting, VWoA acknowledged before the group that Volkswagen of Inver Grove was the winner of its “Top National Courtesy Delivery Dealership”  award for 2022. Representing Inver Grove at the event was Brent Wade, executive manager; Bob Vizenor, general sales manager; and Kristn Fox, sales operation manager.

In addition, to winning the national award, Inver Grove was also named the top courtesy delivery dealer in the Central Region. Other dealer winners of courtesy delivery (CD) awards were Fred Beans Volkswagen of Doylestown for the Northeast Region; Steve White Volkswagen for the Southeast Region; and Armstrong Volkswagen for the Pacific Region.

Global Perspective of VW Group

In addition to examining the U.S. market, the fleet business meeting included a global overview of the Volkswagen Group, which showed that deliveries improved in 2023 vs. 2022.  The forecast is that vehicle deliveries to customers will be 9.5 million units, which represents a 15% increase compared to the 8.3 million delivered in 2022.

Among the key takeaways for the first quarter of 2023 are:

• In Q1 2023, VW Group delivered 2 million vehicles, a 7.5% increase above the year prior.
• VW said supply disruptions in the logistics chain continue, but the situation is improving. These disruptions  have impacted new-model deliveries of VW productions, along with all other OEMs. One bright spot: VW deliveries have improved in Europe, North America, and South America.
• The battery-electric vehicle (BEV) share of VW sales is increasing year-over-year. VW BEV sales will be stimulated by the world premiere of Volkswagen ID.7 and ID.Buzz, which debuted at International Volkswagen Bus Day. According to VW, it projects that approximately 70% of its sales in Europe will be BEVs. By 2030, VW said its goal is for its electric vehicle share of its U.S. sales to exceed 50%.
• In addition, VW said it plans to create approximately 45,000 high-power charging points in Europe, China and the U.S. VW is also investing up to CAD$7 billion in Canada as part of the company’s ambitious growth strategy in the North American region.