Volkswagen Canada launches its first satellite dealership near Calgary

Volkswagen aims to boost sales and service outside major urban centres with the recent launch of the first of 25 smaller satellite stores planned for Canada.

Okotoks Volkswagen, located 30 kilometres north of the main dealership of South Centre Volkswagen in Calgary, opened July 11.

Both stores are owned by Calgary’s Wood Automotive Group.

The Okotoks store is a 9,000-square-foot (840-square-metre) building next door to Okotoks Ford-Lincoln, also owned by Wood. The group owns seven dealerships in Alberta.

The VW satellite store has nine staff, a three-car showroom with three offices, a customer waiting area and six service bays, two of which are shared with the Ford store along with two wash bays.

Okotoks, a bedroom community of Calgary, has a population of about 18,800.

The venture has proven successful for the Wood Automotive Group, which spent “more than six figures” to convert an existing building, said COO Dick Lau.

‘IT MADE SENSE’ TO PROCEED

“The satellite plan came up when the Wood Group was in the process of purchasing South Centre Volkswagen in Calgary,” Lau said. “We already had land and a building we could readily renovate. We know the product, so it made sense to go ahead.

“It has been a great addition to our group. From an operational point of view, it runs like a full dealership with its own equipment and tools. It’s more a smaller dealership in a smaller city with a smaller population.

“We bought South Centre in March 2021, and research showed there was definitely a service opportunity in Okotoks.”

By contrast, South Centre Volkswagen is four times the size — 36,000 square feet (3,300 square metres) — and has 49 employees.

Josh Buchanan is general manager of both locations, and after three months in the dual role, he’s pleased with the store’s performance and the reception from the Okotoks community.

“The town was really in need of some representation,” Buchanan said. “The phone started ringing the minute the doors opened.

FULL-SERVICE SERVICE DEPARTMENT

“We have two technicians, one of whom is a master tech who knows all the systems. We can do any repair needed right here, including warranty work. We have the equipment and the people to do it.”

The Okotoks site has been given its own dealer code. “That means everything we order is from here, and everything is delivered here,” Buchanan said. “That includes new vehicles. Nothing goes to South Centre first.”

South Trail VW and Okotoks VW, combined, have received “solid customer satisfaction scores,” said Thomas Tetzlaff, VW Canada spokesman.

September new-vehicle sales totaled 12 vehicles, said Buchanan.

“We’re going all-in with this endeavour,” he said, pointing to EV chargers on the dealership’s wall. “We will be an EV dealer; we’re just waiting for vehicles.”

The ID4 electric crossover will arrive in Canadian showrooms this year, while the ID.Buzz electric microbus is expected to be a 2024 model.

Volkswagen Group Canada’s director of network development, Michael Ricciuto, called the Wood Group “good partners.”

“We saw there was opportunity in Okotoks, so it made sense to go ahead,” Ricciuto said. While customers generally are willing to drive long distances to buy cars, they aren’t willing to drive “that hour” for service, he said.

“It has worked quite well in Okotoks,” which serves a large rural population and a half-dozen small communities.

Volkswagen has a set of requirements for satellite stores, Ricciuto said, but they aren’t as strict as those for a full-size dealership. That makes the financial commitment less daunting.

Without revealing the cost of dealerships of either size, Ricciuto said new guidelines set a satellite store at about 16 per cent smaller than existing dealerships, and expensive enhancements such as skylights are no longer required.

“There are three satellites in the works, one in British Columbia and two in Quebec who have started construction,” he said.

Satellites are “less than 100 kilometres from a hub in order to have the effectiveness,” he said.

Volkswagen currently has 145 franchised dealerships across the country, but large spaces in the Prairies, Atlantic Canada and Vancouver Island can be more efficiently served with the satellites, he said.