CP+B Readies 'Edgy' VW Push

DETROIT In a tactical retreat from recent efforts to edge into luxury territory, Volkswagen next week will tout a "three cars under $17,000" offer with an edgy TV campaign.The automaker, which underwent a reorganization last month that led to the exits of both director of brand management in the U.S. Kerri Martin and VW headquarters boss Wolfgang Bernhard, will push the New Beetle, the Jetta and the Rabbit, said Bob Grace, chairman of the Volkswagen National Dealer Council. The campaign, Grace said, would begin with three broadcast spots from MDC Partners' Crispin Porter + Bogusky, Miami, including an ad called "Jumper," in which a suicidal man stands on the ledge of a building as a crowd and police gather. The man then changes his mind after a stranger tells him about the three sub-$17,000 models from VW, said Grace, a dealer in Baton Rouge, La. The ad comes after a Super Bowl spot from General Motors featuring a suicidal robot drew ire from the American Foundation for Suicide Prevention over being "offensive and potentially dangerous."Grace was among the VW dealers who had an audience with Adrian Hallmark, head of Volkswagen of America, during the National Automobile Dealers Association convention in Las Vegas earlier this month. The group was shown the new creative, and Hallmark asserted that he was going to lead marketing at VW "for now."Grace said the spotlight is on VW's entry-level autos: "The new ads promote all three of the cars, wrapping them all together. The car is the focus."Throughout the ads that were shown, [Volkswagen] "is positioning these cars as a value, fun to drive and innovative in technology," he added.The work is the first since the change at the top, which also created speculation that Crispin may go the way of Martin, who championed the agency and brought it on board several months after she came to VW from Mini in April 2005. Crispin had handled Mini's advertising.CP+B is said to have locked in a three-year deal with VW, although a source close to VW said that deal "has wiggle room. . . that I know of for sure on the VW side." Volkswagen rep Keith Price said that Hallmark "is not taking any calls regarding this account." Price confirmed that the value-messaging campaign is breaking this week and runs at least through May. As for CP+B: "No review is anticipated."Dealers were thrilled at the new approach, which comes after attempts to enter the luxe segment with the Touareg SUV and the Phaeton. The latter model, which VW introduced in the U.S. in 2003 in the $60,000 range, failed to gain traction, prompting the company to exit the market last year. "We have to keep the prices down to be competitive and they haven't done that," said one West Coast dealer. The dealer said the poor-selling Touareg, which listed for between $37,000 and $44,000 "was about $10,000 overpriced."Other dealers feared that a recent power play in Germany for leadership of the company—which ended with VW CEO Martin Winterkorn on top—might result in even higher prices and move the brand back toward luxury territory.But dealers may be celebrating prematurely, said John Wolkonowicz, senior auto analyst with Global Insight in Lexington, Mass. Wolkonowicz said the market for cars below $17,000 is a tough one and VW would compete for "incredibly status-conscious Gen Y buyers" who will choose "between either something new or boring, or something used and interesting—and VW may not fare well there. Wolkonowicz said the move to emphasizing low price won't hurt VW's brand. "A lot of consumers think VWs cost more than they do," he said. "With this, VW is trying to let people know that they have some good value."Though VW's bid to move upstream was quixotic, sales have hardly suffered. VW sales were up about 5 percent to 235,140 units in 2006, per the company. The gain came even as the automaker cut ad spending 9.4 percent to $272 million January-November, per Nielsen Monitor-Plus. Still, the performance is a far cry from when VW held 6.7 percent of the U.S. market, moving more than 500,000 units a year. Charlie Hughes, who was VW's head of marketing in 1982-83, said VW is right to focus on price. "Their prices are high and they refuse to discount with the competition," he said. "It is clear people are not singing off the same page there, and until they are, things won't straighten out."

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CP+B Readies 'Edgy' VW Push

Steve Miller

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