Under the Microscope: We talk to Volkswagen's head of fleet, Michael O'Shea
22 February 2018
Author: Rachel Boagey
Staying one step ahead of trends and ensuring customers have their
needs met are two areas of focus for Volkswagen. Rachel Boagey speaks
to the company's head of fleet, Michael O'Shea, to find out more.
From catering for the changing demands of its customers via its product portfolio, to making the necessary powertrain plans across all of its brands, Volkswagen's focus has had to significantly evolve over the past few years.
Luckily its changing focus and ability to keep up with demands meant the manufacturer ended 2017 with a total fleet market share of 8.1%, a 0.6% growth compared with 2016. Significantly, in true fleet, Volkswagen's market share has increased from 9.1% to 10.5%.
Responsible for many of these changes and successes over the years is Michael O'Shea, who has held the position of head of Volkswagen Fleet since March 2013.
Based at Volkswagen's headquarters in Blakelands, Milton Keynes, O'Shea was appointed to take charge of a group fleet function covering Volkswagen's five main brands - Audi, Seat, Skoda, Volkswagen and Volkswagen commercial vehicles, where his responsibility is primarily to enhance customer experience.
Since taking over as head of Volkswagen Fleet, O'Shea says he has been very keen to ensure the company developed a deeper insight into the overall UK fleet market, subsequently identifying eight fleet subchannels and then developing different specific strategies for each.
"It was critical that these were developed with a mindset that delivered sustainable and profitable growth for key subchannel stakeholders," he says.
"Our recent fleet growth has been satisfying; personally, of course, and for the business. This sales and market share growth has been achieved with customer-centric subchannel strategies."
While he has held a diverse number of roles since joining Volkswagen in 2000, O'Shea tells us there has always been a common theme throughout his time working at the company. "This theme has been built around having a real passion, and a deep understanding of our key customer stakeholder needs and in developing a value proposition that exceeds their expectations," he says.
A way to make sure customer expectations of the brand are exceeded is by ensuring that you have the right product to meet their needs,
To do this, Volkswagen ensures it has a unique breadth of product offering, helped by the fact that it is an established fleet brand. "Indeed, I firmly believe there's no other manufacturer today with the same breadth and depth of top-quality products as us," he asserts.
One example of its extensive fleet offering is Volkswagen's developments in SUVs over the past year.
With increasing user-chooser demand for SUV-style vehicles, O'Shea insists it has been important for the manufacturer to build a comprehensive offering.
"What we've done in this segment is pretty incredible," says O'Shea. "We've launched the T-Roc into the compact sector, and the Tiguan is still relatively new. We launched the Tiguan Allspace at the start of this year, which is a long wheelbase version of the Tiguan with a huge boot and seven-seat practicality. And of course, we have the all-new Touareg coming in the next few months that will sit at the top of the range.
"Collectively these appealing models give us new opportunities that add to the existing relevance and affordability that Volkswagen already offered."
Simultaneously, there is work going on behind the scenes to ensure that customers' needs are being understood and met.
"Each subchannel has specific needs and we need to develop strategies that allow us to maintain a competitive holding-cost value from a rental customer perspective, versus maintaining 'kerb appeal' for a user-chooser driver selecting their company car," explains O'Shea.
"The skill is in extracting the relevant offer from the broad product range and ensuring that we are constantly refining our proposition to exceed customer value expectations."
If one thing is certain it's that Volkswagen is up there with the top players when it comes to innovation in new powertrain technologies. According to the VW Group, there will be at least one electric version of each of the 300 models the group produces around the world.
"We've seen an increase in customer interest in hybrid and electric across all fleet channels. The future of powertrain technology is very exciting,"
Volkswagen's ID range of pure electric cars is coming in less than two years, and O'Shea says the manufacturer will be able to sell it at a cost comparable with a diesel Golf, for example. "We believe the driving range of these cars will be broadly comparable with some of our diesel cars today too, so it's going to be a really compelling proposition.," he says.
The ID family of models will build on Volkswagen's traditional fleet heritage of offering relevant, affordable and desirable cars. "That's been the Volkswagen fleet DNA for the past 20 years or more, and will continue to be so," he says.
Volkswagen is aiming to fight back against the likes of the Tesla Model 3 when it brings the ID range to market from the end of this decade. The planned range has seen a huge investment from the manufacturer, as the cars are built on an all-new MEB architecture that is solely focused on electric drive. "One of the challenges is building the charging infrastructure and capacity in the UK, but with this new generation of cars that will become less of a problem because, with the long driving range capacity of the forthcoming ID models, they will need to be charged less frequently than customers perhaps assume," points out O'Shea.
For example, the average fleet customer may drive 60,000 miles in three years, which is less than 100 miles a day, but the ID is expected to have a range of at least 300 miles between charges "so charging for a few hours overnight once or twice a week becomes the reality", says O'Shea.
Diesel still rules the roost
For the corporate end user, there's still a robust business case for diesel, O'Shea insists. "It's still reflected in the order take, but of course, we have seen a slight shift, with a move towards petrol-electric hybrids. Ultimately, the trend will be influenced by the government's taxation policies, which will accelerate or decelerate the move to other platforms," he says.
Looking to the future, O'Shea claims Volkswagen has many tricks up its sleeve and will continue to make developments in conventional powertrains while the demand remains. He explains: "We are always developing new technology; for example, the new T-Roc has the new 1.5-litre TSI petrol engine that includes cylinder deactivation when the engine is under a light load. This really does make the T-Roc a compelling car for fleet. We also introduced petrol engines to the Passat in the middle of last year, with offers from a 1.4-litre engine with 125hp to a 2.0-litre with 220hp."
"With the ID series on the way, we're certainly ready for the bigger shift to all-electric drive."
O'Shea is confident about developments in powertrains which he says are going
to be key. "With technology like cylinder deactivation available in T-Roc, Polo, Golf and Arteon, Volkswagen is certainly well placed for these developments, and with ID on the way, we're ready for the bigger shift to all-electric drive," he says.
O'Shea says another trend will be a move towards a car-sharing model in fleet and retail, where marketshare and performance will be measured by the day, hour and even minute. "How quickly that will happen, though, just like many other industry trends, is debatable," he says.