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Volkswagen considers U.S. production, new strategy
Volkswagen of America is in the process of reinventing itself here in the U.S. in an effort to regain market share, while simultaneously trying to stem the losses caused by fluctuating exchange rates. As reported before, the first major step the automaker is taking here in the States is to relocate its corporate headquarters from Detroit to Herndon, Va. The move, according to VW, places the automaker in a good location to understand consumer's taste, while providing the company a fresh start. The move is scheduled to begin sometime in April, with completion by the end of 2008, and will result in the loss of some 400 jobs in Michigan.Also under consideration is the possibility of making more vehicles here in the U.S., specifically tailored for the market. Production of models that take aim at the Corolla's and Accord's of the world is part of the strategy, along with new small-sized 'utes that will benefit from environmentally-focused powertrains (ahem, diesels?).
You can read Volkswagen's full press release after the jump and check out Michelle Krebs' article over at AutoObserver by clicking the "Read" link below.
[Sources: Volkswagen, Automotive News – Sub. Req., AutoObserver]
PRESS RELEASE
Volkswagen of America with new US strategy
Corporate headquarters to relocate near Washington
Jacoby names five pillars of US strategy
Wolfsburg / Auburn Hills, 06 September 2007 - Volkswagen of America, Inc. announced a new strategy for the US market on Thursday, including the relocation of corporate headquarters from Auburn Hills, Michigan, near Detroit, to Herndon, Virginia, in the vicinity of Washington.
Stefan Jacoby, the incoming President and CEO of Volkswagen of America, explained: "The new strategy is based on five pillars: the development of products specifically designed for the US market, a change in brand positioning, realignment of the dealer network and our own organization and, finally, the possibility of local production to reduce dependence on exchange rates."
Prof. Dr. Martin Winterkorn, Chairman of the Board of Management of Volkswagen AG, commented: "The US market has top priority for Volkswagen." Relocation will begin in April 2008 and will have been completed by the end of the year. The move includes Volkswagen of America as well as other affiliated operations such as Audi of America, Audi Financial Services and Volkswagen Credit.
Jacoby said: "The move underlines our determination to play a new and stronger role on the US market. This is a logical step, as the majority of our customers are located on the East and West Coast of the United States, where drivers display a pronounced openness towards modern and exceptionally environmentally sound powertrain strategies such as those our Group is developing worldwide. So it makes sound sense to support this by relocating to the East Coast."
Jacoby announced a workforce realignment, a new strategic direction to connect better with customers and a more efficient organization: "We need fewer redundancies, less bureaucracy and more creativity." Approximately 600 of the present 1,400-strong workforce will remain at the current location in Auburn Hills to support operations such as the call center and technical services such as vehicle finishing. Some 400 positions will be transferred to the new headquarters and the remaining positions will be eliminated. The company has already taken steps to reduce its workforce through natural fluctuation and voluntary separations.
Volkswagen of America has approximately 600 Volkswagen dealers and some 250 Audi dealers in its US network. Dealer profitability is to be increased. According to Jacoby: "Dealers play a key role in the company's growth going forward. They are close to the customers and know what customers want. As a creative team we will be able to fill those needs with strong new products."
Reader Comments (Page 1 of 2)
Alex 2:25PM (9/06/2007)
"Also under consideration is the possibility of making more vehicles here in the U.S., specifically tailored for the market."
Great, so does this mean that in a few year's time we'll be complaining that US VW's look like ass and Euro VW's look great; like we do with Ford today?
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Zamafir 2:51PM (9/06/2007)
and From the possitive camp - finally cars the majority of Americans want I'd Bluetooth support, touch screen nav, 35+ mpg... You know all the reasons a hybrid candy now assumes duty the passat tdi assumed.
Don 6:08PM (9/06/2007)
Listen, all VW has to do is get their quality up and their prices down.
That should help sales AND resale values.
Silver 2:39PM (9/06/2007)
VW is screwed if they can't address long-term reliability. And much of this stems from a faulty corporate philosophy.
How many people had their windows fall into their doors on Jettas/Golfs/Passats because of a faulty retention design? And how many years did it take VW to actually *correct* the problem vs. simply replacing broken parts with new defectively-designed parts and letting the problem happen over and over and over again?
I think VW took the same approach to the easily-broken door handles back in the early 80s. A friend had a 4-door Rabbit and the door handles broke one-by-one. Eventually he had to get into his car via the hatch. Yeah, there's a real consumer loyalty builder right there!
Band-aid fixes from auto manufacturers just won't fly anymore. Consumers are too savvy and too impatient.
I loved my 2000 Passat, but I'm glad I sold it at 50k miles before everything went south. My friend with a 1999 Passat wasn't so smart/lucky.
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Imp 2:44PM (9/06/2007)
Bingo!
You reap what you sow.
Don 6:10PM (9/06/2007)
Exactly!
Except it happened to me with my '00 Ford Focus.
Lol.
Evotec 2:35PM (9/06/2007)
yes add more jobs to USA...
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Todd 3:13PM (9/06/2007)
Why would VWOA spend more money to build or buy out a factory instead of going through the federal certification of the vehicles that we want from Europe?
Bring the Fox or the Polo or some of the Seat or Skoda offerings and get them certified instead making America specific models that will dilute the already mediocre lineup that's available right now. Or how about offering diesels in more product lines.
Get rid of the R32 or R36 and leave that to Audi. Make the GTI cheaper and the Rabbit cheaper. They are too overpriced. Remember the “People’s Car”.
Get rid of the Beetle and start looking for the future instead of the past. It's over already. Move on.
Try to focus on the customer experience that occurs after the sale. That's were the whole ship is sinking. Customer service is where it's at. Treat the customer like gold and you'll get returns.
My ¢2
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Imp 9:24PM (9/06/2007)
Todd, as the US dollar continues its freefall to nearly another 50% drop from here, any company would be crazy not to consider moving production to the US. Save a little on shipping too.
FLR 4:12PM (9/06/2007)
How does moving the entire operation from Detroit to D.C. fix or solve anything? This just cost more money to do so. Suddenly D.C. is the center of the US car market??? Huh????
My only guess is that Herndon gave VW a fat tax break for the next 5-10 years. If any of you have visited Herndon it's nothing but government contractors that have moved in the past 5 years, so their tax rates must be very enticing.
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Bill 5:10PM (9/06/2007)
It helps to be around people who buy your cars. It helps to be close to an international airport (IAD) with lots of direct flights around the world. I'm sure VW execs, or suppliers, dont' want to deal with multiple connections and puddle jumpers to go to/come from the centers of their markets. Yes, Fairfax county and Virginia gave them tax handouts. Fairfax County schools are widely acknowledged as among the best public schools in the nation, and that's a draw to future employees. The DC area attracts ambitious people, so I'm sure it's easier for VW to attract talent (from around the world) rather than convince them to move to Michigan. If VW doesn't build anything near Detroit, why does it make sense for them to be in Detroit anyway? They just need a business office, not a production facility. Detroit is the rust-belt, Northern Virginia is the tech-belt. One's dying, one's growing, which would you rather move to? I don't know which port most imported VW's come to (I think it used to be Wilmington DE or Baltimore) but it's probably also advantageous to be near those ports too, which they probably now will be. Also being near the Federal government puts them in a better spot to keep track of various environmental, trade, and regulatory developments. I hate the DC area, and I hate VW's, but from a business perspective, I understand why they would choose to move here.
J Baustian 9:20AM (9/09/2007)
Moving the corporate HQ to Herndon only makes sense if there's going to be a production or assembly plant in the SE USA. This is very good news.
YourNameHere 4:21PM (9/06/2007)
i bet they could pick up a plant or two from GM for pennies...
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Gardiner Westbound 4:29PM (9/06/2007)
When VW last assembled cars in the U.S. the Golf was called the Rabbit. The UAW quickly turned it into a strike slogan, "No more money, no more bunnies."
Exit VW from the U.S.
Unless VW emulates Honda and Toyota and successfully keeps the union out it's doomed before it starts.
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Tsunami Racer 6:33PM (9/06/2007)
VW's formula for success in the USA is very simple:
1) get quality up, cuz your cars have issues
2) make your dealers not suck, cuz they do
3) take care of your customers, cuz you don't
their products are otherwise fantastic. the germans have the "car" part of the equation taken care of (cept for quality). they just need to fire the entire US management team at VW/Audi USA and get someone like Jim Press to clean house and whoop arse into shape. the only reason for VW's failure, unlike others, has really nothing to do with their actual products, i argue. it's the operations side that's the culprit.
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Throopspeed 7:42PM (9/06/2007)
Tsunami Racer's 3 Rules should be the mantra for VOA (somehow I doubt they will come to pass but that's another story). One other thought, VW is not improving anything to move to the East Coast. They need to go to the Wes Coast, where I bet they sell the most cars and would be in a creative, competitive environment tha could only be good for them. As it is they are further isolating thier corporate culture, which is not going to help anything.
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TouaregTired 10:26PM (9/06/2007)
US Production -- new strategy ... yeah whatever!!!
Don't you guys recognize what is obviously happening here is just another step in denial of reality by the German headquarters?
Sure, everyone knows VW stands for Luxury, so the only reason the overpriced Touareg and Phaeton have failed must be that the Americans working in Auburn Hills don't know how to sell cars. Solution = forget about making cars which fit the VW Brand and the American market, blame your US staff, and move the headquarters so you can get rid of all those losers.
But at the end of the day is problem is in Wolfsburg, Germany, not a USA location -- and once the US arm has moved it will still have the same old parent to deal with.
Finally, I can't believe people are swallowing the concept that VW might invest in a new USA plant. This announcement is such an obvious bait-and-switch. Doesn't anyone remember that VW and Chrysler have signed an agreement for Chrysler to build a VW-badged Caravan? North American production for VW will indeed be put into effect -- in a under utilized Chrysler plant. Whoopee!
Virginia is a just stopping point for the company on its journey to withdraw from the US market.
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EEGeek 8:08AM (9/07/2007)
Yeah, I have to wonder whether the 2nd pillar "a change in brand positioning" is VWAG's way of shoving the Phaetonization of VW down VWOA's throat. Continuing what hasn't worked and expecting a different result, it appears.
I'm one that doesn't understand why VW moved to Detroit in the first place, so if moving allows them to trim a bloated staff, so be it. But I see more motivation for the move of HQ to the eastern time zone as making it more convenient for the geniuses in Wolfsburg to whip their lazy American minions, and to jet in & out.
The only thing I expect from this move is to clearly show whether German arrogance will continue to reign supreme at VW with respect to the US. With Herr Piech running the show, I have few doubts.
St.J 8:39AM (9/07/2007)
Uh oh, Not all dealers will be truthful as to what the customer wants, The Lutz syndrome will come in to play. That will mean telling the consumer what they should have, being large high profit products. I have to say, VW needs a total over haul of the dealers i have been to. I'm sure not all of them are bad but the ones that are, need to go.
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St.J 8:40AM (9/07/2007)
I don't see VW's quality changing much. It hasnt over the last 30+ years. It is a culture issue. Their quality problems all started with the purchase of Audi/Auto Union in the late 60's. When VW switched to Audi fwd tech it somehow brought along all the bad things Audi was known for. Ask any person that owned a 1970's Audi.Things haven't improved enough.
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