Volkswagen: The eternal brand
Selling good quality cars is not an easy job when the brand has been almost non-existent in the marketplace for many years. Volkswagen Indonesia CEO Andrew Nasuri is convinced that the Volkswagen brand lives on.
Volkswagen is the world’s second largest automaker, but it’s a brand that has been hard to find on the streets of Indonesia’s cities for the past few decades.
Local VW CEO Andrew Nasuri admits that it is fair to say that the company hardly did any business in Indonesia in the 1980s and 1990s. Still, Volkswagen clubs and more than 3,000 faithful Volkswagen owners kept the brand alive, reminding people of the company’s past glories with their carefully maintained Beetle and Kombi models.
In 2002, Volkswagen was reborn in Indonesia with the introduction of completely built-up (CBU) cars, but they were subject to high import duties and failed to compete with other brands which had already started production in Indonesia. Between 2002 and 2008, Volkswagen sold only an average of 100 cars a year.
The new Volkswagens were regarded as premium cars, with price tags to match. Volkswagen had to seek ways to change the mindset of people, concentrating on the themes that Volkswagen vehicles are good, reliable and appropriate for Indonesian consumers. This is exactly what Andrew is doing to convince people that Volkswagen is das auto (the car)
“Price is the big issue. The trick is simple, how to lower the prices. The key is competitiveness. We have to take the initiative for local assembly and then move on to produce the cars locally,” Andrew told GlobeAsia.
Volkswagen has long planned production in Indonesia, but the process is taking a long time to realize due to the strict requirements to achieve the standard German quality car.
“We have to learn the A to Zs to meet the standard quality requirements. The approval is by Germany, even the unloading of the parts from the container to the pallets requires a German quality standard and a very meticulous process,” says Andrew, a University of Southern California alumni.
Volkswagen is already lifting its game, with sales of the Golf model, which is now locally assembled, increasing year by year. From an average of 100 cars a year, the number has increased to 350 cars in 2010. The company predicts that 800 cars will be sold by the end of this year.
“That is already eight-fold growth. Our strategy is to increase the sales volume with a sales target for next year twice the number of cars we sell this year,” says Andrew.
Since its launch, the Golf TSI is meeting sales targets, driven by its sporty, stylish and environmentally friendly image. It sports the award-winning new Volkswagen 11kW 1.4 TSI engine which uses twin-charging technology to optimize power and performance, at the same time reducing fuel consumption and emissions.
The Golf TSI features climatic automatic air-conditioning, automatic driving light control, electrically adjustable door mirrors in body color, which are mirror-heated and foldable. Seven airbags are standard in the vehicle, which sells for Rp340 million.
That is far above the price of a host of similar-size competitors, including the Honda Jazz, the new Ford Fiesta and the Hyundai i20. The Fiesta, for instance, sells below Rp200 million, complete with state-of-the-art features.
Abdul, a Volkswagen enthusiast who owns a vintage Volkswagen beetle, says his new Golf TSI consumes 1 liter of gas to drive 16 km, representing good fuel efficiency.
“I bought the Golf TSI because I trust the Volkswagen performance, quality and safety record. Most of all, it is a fast car with good handling and very enjoyable to drive,” he told GlobeAsia.
Andrew admits that Volkswagen doesn’t have a multi-purpose vehicle that can compete with the locally made Toyota Avanza and Daihatsu Xenia. The seven-seater VW Touran is well out of the price range of the two budget people-movers.
As for the new generation Volkswagen Beetle, Andrew says Indonesia might not see the car until 2013 since the car, which is made in Mexico, will not be suitable for use in Indonesia due to different fuel standard requirements.
“The New Beetle has Euro5 or Euro6 fuel standard requirement and is not suitable for Indonesia. We have to make adjustments first such as lowering the standard requirement to Euro2 for use with high-grade fuels available in Indonesia,” he states.
That’s despite the fact that the new Beetle was designed by Indonesia’s Christian Lesmana. The car made its debut simultaneously in Shanghai, Berlin and New York.
Volkswagen policy is to sell cars that are suitable for the people. Andrew stresses. For this reason, Volkswagen is always very strict on keeping to the rules. For example, cars intended for Indonesia must have different radiators to deal with tropical heat.
“We would rather sell fewer cars but with the Volkswagen reputation in accord with the das auto tagline and in the belief that Volkswagen is the car for the people.
“Our philosophy is to follow the same principle as Volkswagen AG as the number two carmaker in the world to provide the best cars at competitive pricing and the best cars for the masses. The brand lives forever and we have to protect the brand. We are here to stay,” Andrew insists.
Andrew himself started his career in the automotive world in Los Angeles at Penske Mercedes Benz. In 1999, he was contracted by House of Imports, the top-volume Mercedes dealer in the United States. He left House of Imports in 2005 as sales and marketing director to return to Indonesia.
In 2006, Andrew took over as CEO of Volkswagen Indonesia and spearheaded the local assembly project. In 2009, the Audi business in Indonesia was also added to his responsibility and he now serves as CEO of Audi Indonesia. Volkswagen-Audi Indonesia (PT Garuda Mataram Motor or GMM) is a subsidiary of the giant Indomobil Group.
Asked how his experience in the US shaped his passion for the automotive industry, Andrew explains that the circumstances are different in the two countries.
“It’s different, the American mindset is transportation. In Indonesia it is prestige. Many Indonesians are missing the point. You don’t buy a Golf GTI intending to be driven by a driver and then you sit in the back seat. You buy a Golf GTI to enjoy driving a good car.”
As for his own lifestyle, he says work is his hobby. “I am a workaholic. Aside from managing cars, my other activities are in the Buddha Tzu Chi Foundation where I was the project manager for the housing rehabilitation project in Aceh. We donated 2,700 houses to the victims of the tsunami disaster,” he says.
The foundation, run by prominent businessman Sugianto Kusuma, commonly known as Aguan, was the first organization to set foot in Aceh following the tsunami. United Nations Habitat gave it a high score for its accountability in managing social donations.
Meanwhile, back at the business front, Andrew, who received his MBA from the Marshall School of Business at USC in 2003, is working toward the establishment of Volkswagen’s first factory in the region.
While the company also plans to open plants in Malaysia and Thailand, Indonesia’s plant will be the first to be built. That, says Andrew, represents an accolade for the government, which has been strongly supportive. GA