Volkswagen Works Out Marketing Bugs on the Web

FRAMINGHAM (06/29/2000) - Volkswagen of America Inc. is in the midst of a pilot program to sell limited-edition vehicles exclusively over the Web.

The pilot program, described by one analyst as an industry first, began in early May and will run until Volkswagen sells all 4,000 of its special-edition Vapor (blue) and Reflex (yellow) Beetles over the Web. So far, the Auburn Hills, Michigan, automaker has sold 2,600 of the specialty vehicles, said Tesa Aragones, Internet manager at Volkswagen.

Volkswagen launched the project Web site, developed by SeraNova Inc. in Edison, New Jersey, so it can work with dealers to improve ties to customers, said Aragones. It also hopes to test whether this selling model could accomplish that goal, she added.

"It's important for us to build relationships with people that come to our site and provide content that is relevant to them," she said. "Instead of trying to go around the dealers, we have really integrated them into the process."

The process works like this: From the Web site, a customer interested in buying a vehicle picks a local dealer from whom he will eventually buy his new Beetle.

He is then prompted through a configuration process to select the vehicle color, interior and transmission type. In the last step, the customer learns the suggested retail price, which ranges from $18,875 to $21,025, depending on options.

Customers must work out the specific purchasing terms and the final price with their dealers, but they have the option of negotiating with the dealer in person, over the phone or through an Internet messaging board.

More than 50% of dealers used the message board to finalize car purchases, Aragones said, while 19% didn't use it at all. Of Volkswagen's 600 dealers, 535 participated in the program, she said.

Rob Leathern, an analyst at Jupiter Communications Inc. in New York, said that although local laws prevent automakers from selling cars directly to consumers over the Web, Web sites such as Volkswagen's provide a unique opportunity for car manufacturers to interact directly with consumers.

It's in the manufacturers' interest to more directly establish a relationship with the customer," said Leathern. Carmakers "spend a lot of money marketing to consumers," he added, "and they're not sure if they are actually hitting the consumer or at what point in the buying cycle. This is one way to get feedback directly from the consumer and get ideas about future programs."

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