VW Testing Insurance Incentives
In a three-month pilot program that began Tuesday, Volkswagen of America is offering the industry’s first no-charge one-year insurance policy to customers who purchase or lease selected models in Illinois and Wisconsin.
VW will offer the VW In The Car incentive through March 31 on new 2004 and 2005 Golf, New Beetle and New Beetle Convertibles. To qualify, residents of the two states must be licensed in Illinois or Wisconsin and take delivery of a qualifying car from a VW dealer in those states.
Volkswagen will pay the premiums based on a new insurance model that bases risk on the car model rather than a driver’s profile. The promotion is expected to lure younger, more high-risk drivers, the automaker said.
At the end of November, U.S. 2005 sales of the New Beetle were down 37.9%; New Beetle Convertible down 13.4% and Golf down 18.1%, according to VW of America figures.
The VW In The Car incentive changes today’s auto-marketing focus, aiming the spotlight on customer benefits rather than rebates. The incentive will not diminish the car’s trade-in value the way that rebates do, according to automotive information Web site Edmonds.com
“Traditional customer cash incentives have the effect of accelerating depreciation; what a consumer gets in an upfront discount is taken away in part at trade-in time,” Bob Kurilko, VP for Edmunds.com, said in a statement. “VW’s shift to a true added-value strategy—paying for a year’s insurance costs—gives the consumer more realized value without generating the downside of traditional incentive programs.”
Unlike zero-percent financing programs, the incentive benefits every customer of the three models. Approximately 70% of new-car shoppers do not qualify for 0% financing, according to Edmunds.com research.
Unlike traditional rebates or low-interest incentives offered by other automakers, the insurance process has patents pending, ensuring that it will remain exclusive to Volkswagen of America during the pilot.
The policies are underwritten by Nationwide subsidiaries in the two states, and were devised by Creative Innovators Associates, Bethpage, NY.
Dealers provide the customer’s name, address and driver’s license number, and within about five minutes the customer can drive away with an insurance policy. An insurance professional calls within three business days to explain the policy, confirm coverage and provide assistance.
