Checking in on VW comeback: 'I believe in the redemptive power of America'

Brand walks fine line between growth and winning back its base

Scott Keogh, who took over at the head of Volkswagen of America late in 2018, has big plans for the German brand. He intends to "make Volkswagen matter again in America," he told us along with a small group of automotive journalists at the 2019 Detroit Auto Show. "With the lack of SUVs, the emissions issues ... we made it un-matter."

Between 2010 and 2016, the percentage of VW sales that were utility vehicles stood at just 9 percent. Over the past two years, that percentage has skyrocketed to 48 percent. And, with the redesigned Tiguan overtaking the Jetta as VW's best-selling model in the United States, the rise of the seven-passenger Atlas, and the addition of a five-passenger version of that crossover, it's likely that more than half of all VW-branded vehicles sold in America in 2019 will be crossovers.

VW finds itself navigating a tricky U.S. market. The brand spent several years Americanizing its lineup — the Jetta was made larger, the Passat moved to its own dedicated platform designed specifically for the tastes of buyers in this country, and vehicles such as the Atlas are clearly designed with American buyers in mind. But VW can't afford to lose its German People's Car identity. "The last thing VW needs is to be like everybody else," said Keogh. So, while the brand desperately needs to increase the 2-percent-ish market share it holds in America, it can't risk alienating its current customer base.

That's especially true in the wake of VW's much-publicized diesel emissions scandal. TDI owners represented an important core market for Volkswagen all over the world, including here in the United States and especially in the pivotal coastal markets. Keogh rightly understands that VW cannot give up on the idea of winning some of those ex-customers back. "I believe in the redemptive power of America," he said, adding that the only real way to convince those owners to come back into the fold is by offering them the right products at the right time.

But VW also has to spend its money wisely. Globally, the automaker has paid out more than $30 billion in fines and lawsuit agreements to settle its diesel emissions scandal, and those bills will carry on into 2019. At the same time, Volkswagen can't afford to stop spending money on future products, from refreshes like the Passat that just debuted at the 2019 Detroit Auto Show to a slew of brand-new electric vehicles that are slated to start production before the end of the year.

"Let's be blunt. You have a certain amount of resources, and you have to maximize those resources," Keogh told us.

And that's exactly why the 2020 Volkswagen Passat is still riding on a version of the automaker's New Midsize Sedan platform instead of its newer MQB chassis architecture. Keogh told us that a decision was made to spend money smartly on the Passat, focusing on the sedan's styling, boosting its available technology packages, and adding the company's most current suite of safety features.

That strategy is sound. It allows Volkswagen to keep the Passat around, even as some rival automakers pull out of the sedan market entirely. And despite the fact that sedan sales are falling, there were still more than 4 million four-door buyers in the States last year, a fact VW pointed out when it teased the 2020 Passat on Twitter. The NMS platform is still perfectly good. And nobody is going to argue that VW's resources aren't better spent getting ahead of the curve on electric vehicles.

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