“Price is what you pay. Value is what you get” – Warren Buffet
Volkswagen is a brand which is considered to be a premium brand within the motor industry and by consumers alike. But, what exactly does ‘premium’ mean, and how do they achive this? Well, its not quite a luxury brand along the lines of Mercedes, BMW, Audi. Also, its not a budget brand like Dacia, Seat, or Fiat. There are mid range brands which are main competitors of Volkswagen such as Renault, Toyota, and Ford. Volkswagen, being a premium brand, would position themselves slightly ahead of these close competitors.
A key driver of brand positioning is marketing. Specifically, the four P’s of marketing. Price, Place, Product, Promotion. Lets have a look at one of these, Price.
There are a few elements which combine to determine the price of a new car. Production costs, Government taxes such as VAT and VRT, which in turn are now determined by emmisions. You also have retailer and manufacturers margins. So its not as simple as picking a figure which is slightly more, or slighly below a competitors price. Also, the final RRP the manufacturers sets is a key influencer of the consumers perception of that brand.
Take a tdi Audi A3 which starts at €32705. A Volkswagen Golf with the same engine and gearbox combination is €28595. Also, a Seat Leon costs €25050. All three cars are made by the same manufacturing group. But is the Audi really over €4000 better than the golf, and the Golf €3500 better than the Seat? The price structure is a driver of the consumers perception of the brand. The more expensive the car is, the better it must be.
Volkswagens tend to have a sticker price which is slightly higher than its main competitors, however they use clever offers which then make the car more affordable if not as affordable as the competition. These include money off offers, purchase contributions and low rate finance from their own Bank. Buying a €30,000 Volkswagen on 0% or 1.9% APR might have the same or similar monthly cost as a €28,000 ford at 6% or 7% APR. Therefore the consumers perception of the quality of the brand is not tainted, but the brand remains competitive.
“The moment you make a mistake in pricing, you’re eating into your reputation or your profits.” – Katharine Paine
dartagnanmarketing 
I worked a short stint in a car dealership and I must say all of this is bang on the money accurate.
Car dealerships adore their PCP plans.
Great work Kevin
LikeLike