The German carmaker that brought us. "Fahrvergnugen" and the Bug is now marketing Visa.
Like General Motors and Ford before it, Volkswagen is offering a cobranded credit card that gives cardholders rebates on a new car.
Card industry experts expect more automotive companies to begin credit card rebate programs. Honda bypassed the trend by hooking into the AT&T Universal Card rebate program so that cardholders get up to $1,200 off a new Honda.
Nissan seems to be next in line to introduce a cobranded rebate card of its own. Industry followers predict it this fall.
Corey Stone, principal with Easton Consultants in Stamford, Conn., characterizes the latest entry as a "me too" program.
Automotive companies have latched onto credit cards as a way to build consumer loyalty and give them extra value, points out Robert B. McKinley, president of RAM Research Corp. in Frederick, Md. "These cards worked very well for the airlines.
"This will be a way of doing business in the years to come," Mr. McKinley said. But for Volkswagen, he added, it might have been a defensive move against customer attrition.
Volkswagen Sales Sluggish
For the past couple of years, Volkswagen has had sluggish sales in the United States, but that tide may be turning. A Volkswagen Visa rebate card could help keep VW car owners coming back to the showroom, and more importantly, prevent a defection to GM or Ford.
The Volkswagen Visa provides "a great opportunity to increase brand consideration, interest, and loyalty," said James F. Taubitz, a company spokesman.
"The jury is still out on whether the card relationship enhances repurchase loyalty," Mr. Stone said.
A recent survey by Brittain Associates in Atlanta shows that General Motors MasterCard holders bought GM cars and trucks sooner than they would have without the card. So far, 200,000 people have redeemed GM rebates.
Volkswagen of America, Auburn Hills, Mich., has sent out credit card applications to 500,000 VW owners, Mr. Taubitz said. The carmaker plans to mail four million applications in the next two years, he added, focusing on VW car owners.
Initially, 5% of purchases made on the VW card can be applied toward the purchase of a new Volkswagen. Cardholders can accrue $700 a year, up to $3,500 over five years.
Mr. Taubitz said the company plans to line up rebate partners the way GM and Ford did.
Shopping at those merchants can give cardholders a 10% rebate on purchases.
Volkswagen may also take the rebate concept to its home market, he said.
MBNA Corp., the industry leader in cobranded and affinity card programs, will issue the Volkswagen Visa cards.
Volkswagen started an affinity card program with MBNA in 1992, issuing Visa cards to some 15,000 members of the Fahrvergnugen Club.
The club formed a few years after Volkswagen created an advertising campaign around the term "Fahrvergnugen," which Mr. Taubitz said translates as "pleasurable driving."
Cardholders got discounts on electronic equipment, airline tickets, and cruises.
Those who still carry the Fahrvergnugen Club Visa will be automatically transferred into the new rebate program.
The VW Visa requires a $20 annual fee for the classic version and $40 for the gold card. The fees are waived the first year. Cardholders can opt for a 16.9% fixed interest rate or a variable rate of prime plus 7.65%.
Compared with other cobranded cards, Volkswagen's interest rates are not that competitive, Mr. McKinley said. "MBNA's one of those unusual issuers that get away with charging high rates and still remain profitable."
