Can Volkswagen turn it around in the US?
While the VW brand is leading in Europe and surging in China, it's actually going backward here.
The U.S. automotive market is on a tear in 2014, with first-half sales up 4.3 percent in unit terms and the seasonally adjusted pace for June better than at any time since 2006.
A notable exception has been the sales of Volkswagen (VLKAY), down 22 percent for the month and 13.4 percent for the year.
VW's anemic sales performance in the midst of a climbing U.S. market should be doubly troubling to the brain trust at headquarters in Wolfsburg, Germany. VW executives have asserted that a strong U.S. presence is key to its goal of attaining No. 1 status in the world by 2018.
While the VW brand is leading Europe and surging in China, it's actually going backward in the U.S., having been surpassed by newer entrants to the market, notably South Korea's Hyundai and Kia.
The immediate reason is that VW's car models, while attractive to a small base of fans, are mostly at odds with the preferences of American consumers in size, price and utility.
"Volkswagen has been and continues to be in a new product drought. It simply doesn't have the vehicles or the breadth of product portfolio to capitalize," said Michelle Krebs, senior analyst for AutoTrader.com. VW, for example,"is missing out on the fastest growing segment in the market, the compact utility. It has the Tiguan but it can't compete with the likes of Ford Escape, Honda CRV and RAV 4."
While the price of the Tiguan is roughly comparable to a Toyota (TM) RAV4 or Honda (HMC) CRV, its operating costs are about 20 percent higher per mile, according to Edmunds.com, partly due to worse fuel economy.
The automaker's Chattanooga, Tenn., plant -- opened in April 2011 -- has been manufacturing a Passat family sedan that is much more competitive with the top performers in its class than a previous European-built Passat. Oddly, VW so far has failed to follow up Passat with a similar-sized crossover, the introduction of which dealers have been urging.
VW dealers in the U.S. are disappointed, having invested heavily in their stores for the past few years with the understanding that the German automaker intended to boost its offerings and modify them to be pleasing to a broader U.S. consumer audience.
Incredibly, the original Beetle was the last VW model to capture American mass-market interest. The Rabbit was actually a dog, plagued by defects and poor quality. Earlier VW managements weren't committed to learning the American idiom, choosing rather to find consumers who favored the VW style that appealed to Europeans.
VW's luxury franchise, Audi, nearly closed its doors in the early 1990s before bouncing back to become on of the U.S.' coolest brands, a rival to BMW and Lexus.
"It will be a couple more years before VW's entire model line is fully refreshed on the new platform system," predicted Karl Brauer, an analyst for Kbb.com. "Don’t expect VW's sales trends in the U.S. to change any time soon."
Within weeks or maybe a few months the automaker is expected to announce a plan to build the Tiguan replacement, either in Chattanooga or in Puebla, Mexico. Assuming that happens, the new model won't reach showrooms for at least two more years.
VW may reach its goal of global sales domination anyway. But the celebration in Wolfsburg will be more joyous if a U.S. turnaround is one of the reasons.
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BMW. Does not make for an economical car, especially with the odd repairs that cost a ton.
Lots to like about the size, power and fuel economy, but all that does not matter when the service and repair costs are BIG.
The American public thinks of VW as an economical car I believe. That is not the case with their cars any more.
I have a 2008 Jetta and the car has performed well. The gas mileage is below expectations compared to similar size vehicles. The reason I will probably never buy another VW is the repair costs! I had a windshield washer fluid container start leaking (never heard of this before) and the dealer told me it would be approximately $500-600 to replace! They were going to charge me $200 just to diagnose the actual problem (pump, container, hoses, etc.)
Every time VW improves U.S. sales, the GREED mode kicks in. This time around, the 2014 model year only includes the first two years of maintenance rather than three. Audi reduced included maintenance to the first oil change and that's it. VW markets, then takes forever to release upgraded versions of existing models and takes even longer to release new ones. Not to mention how stingy they are when it comes to power increases, doling them out in 5HP increments just so they can milk every penny out of dated designs. When you add in the fact VW's, like ford and Chevrolet, come with a 3 year warranty ( the worst in the new car industry), I decided to give up on VW again. This time I won't be coming back.
My husband and both have had VWs and would again if their cars weren't so boring! The Passat is so dull and has an engine to match. The CC showed promise early on, but now is heading in the wrong direction. The Toureg is just way, way, way over priced for what you get. And I apoligize to the Beetle fans, but I'm so over that car. I know they are a throw back, but those "moon" rims are just ugly. Anything exicting that everybody wants, like the Golf R, isn't available here. My husband is pining away for that, but won't be here in time for the lease on his GLI is up, so no VW this time.
The last was a 80 Vanagon. AirCooled, it was remarkably slow, but quirky fun enough we loved it...
till something went wrong... then it was never cheap and always a miserable experience with waiting on parts an repairs.
Friends with new VW's all like driving their cars, but ALL OF THEM have expensive repair stories. Friends with Honda's, Toyota's just don't have those $1500-2000 repair tales for stuff like 'leaking exhaust manifolds', etc.
VW made a good first step by building a Passat tailored to American tastes and preferences, but seems reluctant to move any further in courting the American consumer. I don't see VW becoming a major player in the American market without modifying its product offerings to suit average American consumers. While there is a market for European-style cars in the U.S., it is small when compared to the broad, overall market.
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