THE FRIDAY INTERVIEW: PAUL WILLIS, MANAGING DIRECTOR VOLKSWAGEN GROUP IRELAND:HINDSIGHT IS a recurring theme in motor industry conversations these days. Just like the property market, the car industry is awash with people who seemingly predicted the collapse in sales.
Ask Paul Willis if he would have taken on the role of managing director of Volkswagen Group Ireland had he foreseen the enormous collapse in new car sales and he emits a brief chuckle. “It wouldn’t have made a difference,” he says. “There was a job to do and you can’t just think short-term.”
Last October he took control of Volkswagen’s portfolio of brands here: Audi, Skoda and, of course the eponymous marque. Until October last year responsibility for the Irish operations of Volkswagen, Audi and Skoda lay with Motor Distributors Ltd (MDL), under the control of the O’Flaherty family. Now they are directly controlled by Volkswagen Group. In November, Seat will join the VW ranks, the last locally run VW brand in Ireland to be taken back by the parent firm.
When Belfast-born Willis took the reigns of the VW Irish operations last October, the market was down 18 per cent. That year ended with sales of 137,000 new cars. Since then the market has collapsed by a further 64 per cent, with even the most optimistic sales projections failing to exceed 60,000 new cars.
Willis, however, is no newcomer to the seemingly unending upheaval in the motor industry. An economic emigrant from the North at the age of 18, he went on to build a 20-year career in the motor industry in Europe. Numerous high-profile roles at several big-name car brands included a spell as managing director at Rover UK, during BMW’s ownership.
“I had two tasks there,” he says, “to maximise revenues and at the same time assess the future for the brand. That was where the real issues were – the long-term return on investment for BMW just didn’t look strong.”
In the end BMW broke up the firm, selling the remnants to Phoenix Venture Holdings. By that time Willis was with Volkswagen UK. Rover closed in 2005.
For all the pain and turmoil in the Irish market, he remains optimistic about the country’s economic future and that of the car industry. “If you are a business operating on short-term horizons, you’re going to get short-term results,” he says. “We’ve got difficulties like every industry in Ireland, but it’s a point in time. We think the new car market in 2010 will be roughly same as this year, with sales of between 55,000 and 60,000. After that, in 2011 it will be about 70,000 and in 2012 about 100,000.
“However, we expect average sales will be 140,000 to 150,000 in a recovered market. That’s a sustainable level. It’s just we’re going to have problems for three or four years ahead and the economic tail of the downturn here is going to be longer than in other countries.”
Can 150,000 annual new car sales support the current scale of the industry here? While he doesn’t believe there is overcapacity in terms of cars, he accepts that for the industry as a whole, there are perhaps too many dealer outlets in Ireland.
“You’ve got some brands that rank seventh or eight in terms of sales with more dealerships than brands in the top five,” he says. “I’m not sure the science of network planning has been thought through here. I understand the need to cater for rural communities, but you have to have viable businesses.
“If you drive around Dublin you can see the empty showrooms. That reflects the economic situation but also the franchising policy of certain brands. There is direct correlation between the number of dealers and the size of the brand share. If you try to cut the cake too many ways, everyone starves.
“Having said that, most of our dealers have been smart in the good times and have reasonable balance sheets, which will see them through the difficult times.”
He sees the long-term future for dealers in exclusive brand outlets. Dealerships that handle multiple brands on the same premises simply don’t work, he says. “Motor malls don’t work. From our research, the customer will have two or three cars on his or her shortlist and all the background decision-making is done at home. By the time they come to the dealership they will have chosen the brand or have two models in mind.”
Unlike some of his industry counterparts Willis doesn’t blame the Government or last year’s changes to an emissions-based car tax system for the collapse in car sales. “I don’t think it’s as simple as the changes to the tax system. We’re in a global recession. The timing of the tax changes didn’t help but then the Government didn’t know what we were getting into economically.
“As a nation, I think if we all start playing the blame game, we’re wasting energy. Instead, we all need to take a step back and recalibrate where we are in Ireland. Over many generations, this country has proved it can pull together and now is the time to do that again. In our business we have to put the customer first. That’s how we’ll get out of it.”
“Customer orientation in Ireland in a lot of businesses leaves a lot to be desired. When I left, Ireland was a country where you would get personal service, where people really cared about what you thought of them. The Ireland of 2009, what I see when I go shopping with my wife, is a very different place. We’ve lost a lot of that service.
“I think we need to make sure we look after every customer we can get and I include our own business in that requirement. With 50,000 new sales a year, every customer experience is vital. The key to getting out of this economic situation is with the customer.”
As to ambitions for his portfolio of brands, Willis is clear that he wants VW to challenge Ford and Toyota for market leadership. Currently VW has a 10.8 per cent share, compared to 14.2 per cent for Ford and 13.6 per cent for Toyota, so it’s not a foregone conclusion.
“When I say I want VW to be number one, I mean in terms of customer satisfaction, loyalty and market share. It’s not a single goal of selling more cars. I’m more concerned with achieving number one in customer satisfaction quicker than number one in sales. If we get the right products, price them properly and serve our customers the sales results will happen.
“We have similar goals for the other brands. With Audi we want to be the best premium brand in Ireland. It has already achieved that in terms of sales, outselling both BMW and Mercedes this year. Now we have to ensure the Audi customer experience is the very best.
Willis is also very happy with Skoda’s performance this year. Currently holding a market share of 4 per cent, he describes it as the “hero in the stable of brands at the moment”. As for Seat, the next addition to his portfolio, the brand currently has a 1 per cent market share.
“I think there needs to be some investment in the brand. I don’t think there is any point in having less than a 2 per cent market share.”
The motor industry faces massive challenges. Along with the economic issues, environmental factors are already changing the motoring landscape with electric cars and hybrids playing an increasing role in its future. Yet Willis remains optimistic about the potential for the industry and is clear on how to cope with upheaval: focus on the customers. “Concentrate on that and your other goals will come.”
On The Record
Name:Paul Willis.
Age:49.
Lives:Dublin.
Position:managing director of Volkswagen Group Ireland.
Family:Married to Sandra with two children, Ruairí (15) and Nia (6).
Background:Left Belfast at 18, studied geography and statistics at University of Aberystwyth. Joined Marks Spencer as management trainee in 1981, recruited by Ford UK in 1987, became manager in 1992. Spent two years with Toyota UK before joining Mazda UK as sales and operations director in 1995. Moved to BMW as sales director in 1997 and in 1999 became managing director of Rover UK. Became brand director of Volkswagen UK in 2000. Was head of sales and marketing at Kia Motors Europe before taking up new post with VW Group Ireland.
Hobbies:A dedicated family man, he enjoys watching rugby with his son Ruairí.
