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VW of America's plan for expansion: More core, less niche
In 2006, Volkswagen sold over 235,000 vehicles in the U.S., and by 2018, it plans on cresting the 800k mark per year. The refocus of VW comes at a time when the automaker lost over $800 million last year, and through a revamped product line, a focus on core products and a five-percent price drop on its models, VW plans to be in the black Stateside by 2010.The move, in conjunction with Audi's planned dominance of the luxury segment (still waiting on that one), will bring sales in the U.S. to over one million units in the next decade. Products will be the driving force, which will include two volume sedans, better priced to compete with the Civics and Accords of the world, along with the new Tiguan and a mid-sized SUV. Production at Volkswagen's plant in Puebla, Mexico is at capacity, so the possibility of opening a manufacturing center in the U.S. is definitely in the cards.
Stefan Jacoby, V-Dub's new CEO, realizes that the automaker has strayed from its "people's car" roots and intends to rectify the situation. Although the push for less niche-oriented brands could be the financial savior of VW here in the U.S., a couple of quotes from his interview with Automotive News gave us pause. Specifically, Jacoby mentioned the discrepancy in products between the U.S. and European markets, citing that, "They are over engineered and made for high-speed performance for the European driving environment." We like VW's performance offerings, and the thought of the mass Camcordization of their product line is hardly what the market needs, let alone what the brand's fans have come to expect.
[Source: Automotive News – Sub. Req.]
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Reader Comments (Page 1 of 2)
Rick 11:57AM (9/17/2007)
Nice to see and hear. A maxed out Jetta is $30k, a maxed out Civic is $21k Civic Si is $23k. There's a lot of price adjustment VW needs to work on. They make quality cars, but they are more expensive and less reliable then most of their competition resulting in their current losses.
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Avinash machado 11:46AM (9/17/2007)
They have to adress their reliability problems on a war footing.
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Don 10:33PM (9/18/2007)
Not to mention an entrenched, overpaid, and unionized workforce; a horrible exchange rate, and the folly of not having a US manufacturing plant.
gumby_mac 12:08PM (9/17/2007)
"Specifically, Jacoby mentioned the discrepancy in products between the U.S. and European markets, citing that, 'They are over engineered and made for high-speed performance for the European driving environment.' "
Yup. If you're going to be successful in the U.S. market, ditch all that high-quality, go fast goodies and give us 3rd row seating, 22" wheels, and cup holders! And cow bell... the new Golf is missing something. I think it needs more cow bell.
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Mondo 2:12PM (9/17/2007)
Definitely needs more cowbell baby, gotta have more cowbell! gumby_mac gets my vote as favorite post of the day.
sirAQUAMAN 12:09PM (9/17/2007)
I'm a 2-time VW owner ('01 Golf TDI, '07 GTI) and have to shake my head. Americanization is not the answer. I do not want to purchase a rebadged Caravan. I would prefer a Touran... something unique.
VW does not offer the full model range here, has not committed to America, delays product introductions, and has suffered from negative dealer satisfaction, questionable attitude, and poor product quality scores (my 2 vehicles have had great reliability however).
VW can still command slightly premium pricing, but deliver the right product and features for it. I know from experience to get a VW after about 1 year from NA introduction before they go decontenting - if they haven't already. Currently you can't even get BLUETOOTH on even VW's most pricey models, and the NAVI systems are a generation behind. TDIs aren't available like they should be either. And there's no larger vehicle for people to move up into - Touareg is too expensive for many and wagons aren't vertical enough. Touran would have been an ideal stop-gap, and Tiguan can't come soon enough.
I really don't get VW. Give me the Euro product and I'll pay for it. Don't give me this Americanized crap or I'll go elsewhere. Competitors like Mazda continuously improve but VW does so much wishwashing, time and money wasting it's incredible.
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Araemo 8:48AM (9/18/2007)
The lack of TDIs is not volkswagen's vault. Congress passed new emmissions rules for diesels too late for VW to re-engineer their engines for the '07 model year, but unlike the usual, congress made the rules effective for the 07 model year.. Congress didn't mind doing it, because the companies it effected don't give as big campaign contributions as the companies that wanted an extra year to get their diesels out.
More on topic however, I don't think this bodes well for VW.
The Mk5s are very interesting and I for one am on the edge of my seat waiting to see if they're more reliable than the Mk4s. If they are, I'd buy one in a heartbeat. Despite the price premium. Because even though they're more expensive, the apparent quality is so much higher, it FEELS like you got more for the money too (As long as it stays out of the shop anyway).
VW owners tend to LIKE that over-engineered feeling, the way the cars are designed for european roads, not american traffic jams. Take that out, and you remove the VW from the VW...
Mike 12:15PM (9/17/2007)
It's because automakers are listening to these idiots who got MBA's in the 80's and are following old-school policies.
Just because the entry and mid level luxury $30k+ car segment is the most profitable doesn't mean you can and should sell cars in it. These morons think you can change brand image in one model generation by moving options upmarket...yeah well VW is great evidence that quality must follow suit and that your market will not necessarily move with you. Shoppers of the competition in that market are extremely loyal and are not willing to leave their 3 or C for a new name to the game, especially one known for a "common mans" car.
Damn it VW, start making great normal persons cars again or you are gonna go the way of the Big 3...you have Audi and Bentley and Lambo, let them do what they do best and you stick to your game: THE PEOPLES CAR.
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sirAQUAMAN 12:19PM (9/17/2007)
I don't care about the 'People's Car' thing. They can solve that by bringing/importing/building in North America more of their model range. Why we don't have a Polo is beyond me.
What I don't to see is the decontenting and dumbing down of the driving dynamics and feel. Where will that get them? A rep for a similar car with no advantages and the reliability and dealer disadvantages. If they do that I might as well and will buy from another manufacturer - whether it be Audi/BMW or Honda/Acura/Mazda.
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wally 12:26PM (9/17/2007)
They will have to build them in North America to compete on price. Euro = 38% premium.
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Kumar 2:37PM (9/17/2007)
...build them in (north)america.
That comment about americanizing them is frightening. The only reason I would want one is for it to be MORE euro spec, not less. If I wanted that, I'd just by a chrysler sebring.
I'm more than ok with a car being 'over-engineered' for a little extra coin.
VW's biggest problem is with-holding extras and forcing you to buy expensive packages to get them. Only the rabbit had seat heaters standard, the rest required a package, not a simple accessory order.
doglet 1:34PM (9/17/2007)
"They are over engineered and made for high-speed performance for the European driving environment."
yeah that 2.5 liter is a marvel of modern enginering, it really comes together at 150 mph.
NOT
the simple fact is that you dont get a lot of car for your money when you buy a VW. when that changes, they will sell more.
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akatsuki 1:18PM (9/17/2007)
What they need to do is stop overlapping VW with Audi all over the place. But if they start going downmarket with quality and decontenting their cars, there is no way that I would buy one over a Mazda. The main attraction is the higher quality small cars, and this will pretty much ensure VW's demise in the US market.
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Drewboy 1:18PM (9/17/2007)
Ha. This is only going to add to VW's failures in the US. Bad strategy.
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Ted 1:24PM (9/17/2007)
Unfortunately for VW, the people's car is either a Toyota or a Honda. Generally, Honda and Toyota buyers want a good, reliable car that does not squeak and rattle. They want it to get good gas mileage, and they do not want it at the dealer for "unscheduled service" 6 times in 2 years. Handling and acceleration, for these customers, are important but not top priority.
This entire "people's car pie" has gone to the Japanese and the Koreans. Trying to get some of that pie is going to be tough and, probably for VW, unprofitable.
The "pie" VW should focus on, is the customer that wants spirited acceleration, precise handling, and nice interior materials.....and is willing to pay a little more for these traits.
Finally, VW needs to address the reliability issue. Sure, their engines can go 200,000 miles, but the rest of the car can't even come close. No buyer will buy a vehicle that needs to live in a dealer repair bay.
I was a VW customer, an Infiniti (instead of a Passat) now sits in my driveway.
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nagmashot 2:22PM (9/17/2007)
can someone explain me that $800million lost of 2006?
Better do your research article Author... VW made a record win in 2006 with 945,000,000Euro ($1,304,100,000), and in 2005 they made a win of 741,000,000Euro ($1,022,580,000) ...
http://www.volkswagenag.com/vwag/vwcorp/info_center/de/publications/2007/03/Abschluss_2006.-bin.acq/qual-BinaryStorageItem.Single.File/2006_VWAG_Abschluss_deutschl.pdf
The officel 2006 VW blance sheet...
VW sold from 01-07/2007 3.61million cars world wide that is a increase of 8.1% ...
Tio 1:55PM (9/17/2007)
I think everyone has their idea of what is wrong with VW.There are so many things wrong it is hard to pick where to start. I'm in the camp that says they need a simple 4 passanger car that sells in the lower end of the market. One that focuses on quality, reliablity and fuel economy. The Rabbit is priced at the upper end of the economy range. Fuel mpg is only good if you get the TDI and that shoots you out of the low price field. The Up! looks like a good idea. Can it compete with the Fit, Versa yaris, Accent/Rio on interior room and under cut their price? Good luck VW.
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Graham 2:17PM (9/17/2007)
People don't want an americanized Volkswagen. People buy VWs because they are a slightly premium product (or are perceived to be) over a typical Japanese car. German car at a decent price. That said, they're losing money like crazy over here, and their products are overpriced. Plus their perpetual build quality and dealer quality issues need to be addressed before they can start making money. $30k for a GTI or GLI? That's crazy. Those should top out in the low 20s. And not fall to pieces. I love my Golf, and will probably replace it with another one (used). But I sometimes envy the boring reliability of a Honda.
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Nick 2:26PM (9/17/2007)
How about learning how to make electronics that work?
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futurama 2:33PM (9/17/2007)
Excuse me, nagmashot. The author is talking about VW America, not Volkswagen AG. VW America did lose more than $800 million in its operation in US. You obviously have no idea!! So..next time, before you post anything pointing fingers at, do your research. You know nothing more.
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