Volkswagen makes U.S. its top priority
FRANKFURT, Germany -- Volkswagen AG plans to build a Toyota Camry-fighter, a midsize car designed for Americans, as part of an effort to stage a comeback in the U.S. market where it was once a strong player.
Volkswagen will also add a small sport utility vehicle to its U.S. lineup, the Tiguan, which it unveiled this week at the Frankfurt motor show. The new vehicles are crucial to the German automaker's plans to triple its U.S. sales over the next decade to reach 1 million vehicles, 800,000 of them VW-brand cars and trucks and 200,000 Audis. The firm also aims to stop losing money in America by 2009, but its primary objective is to re-establish a strong presence, Stefan Jacoby, new head of VW's U.S. operations, said Wednesday.
"The United States is now our highest priority," he said in an interview on the sidelines of the Frankfurt auto show. "We are strong in Asia, especially in China, we are strong in Europe and we are strong in South America. But one of our weakest areas worldwide is the United States."
Volkswagen still has a strong brand image in the United States, but its U.S. sales have dwindled to around half their 1970 peak of close to 570,000. In recent years, the automaker has fallen behind its Asian competitors after allowing its U.S. lineup to grow stale, and failing to respond to changing U.S. market conditions.
Earlier this month, Volkswagen said it would move its American headquarters from Auburn Hills to the northern Virginia suburbs near Washington, D.C., to be closer to its customers, who tend to be on the east and west coasts.
Now the firm is working on making vehicles that better meet their requirements. In the past, while Japanese carmakers developed cars like the Toyota Camry for the American market, VW offered vehicles designed for Europeans and ended up selling niche models in the United States. They were often priced wrong for their segment. The VW Passat, for instance, is about as large as the Camry but costs around 25 percent more.
"It can't have escaped their attention that the Japanese are selling very large volumes and making very large profits in the United States," said Warwick, Britain-based auto analyst Peter Schmidt. "The message is, if you do your homework and sell the right product, you can make a lot of money."
Jacoby wouldn't give details about the midsize car VW is developing for the U.S. market but said it would probably hit the market in three to four years.
VW will launch the Tiguan, which it calls the Touareg SUV's little brother, in America in the second quarter of 2008. It expects to sell 20,000 to 25,000 Tiguans annually in peak years, said Adrian Hallmark, executive vice president of Volkswagen of America. Volkswagen may also bring a version of its tiny Up city car concept to the U.S. market. The concept was unveiled here this week.
VW executives spoke about plans to produce pickup trucks for emerging markets, but Jacoby said the company was not planning a pickup for the United States. "A pickup in the United States wouldn't fit the VW brand," he said. "In the United States, we want to focus on sedan segments."
VW has said it is considering making cars again in the United States, partly to protect itself from the effects of unfavorable currency swings. The company hasn't announced any decision. But when Jacoby was asked if VW could establish a greater, long-term presence without producing vehicles locally, he said no. "It's almost impossible without a North American factory."
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Print | posted on Wednesday, September 26, 2007 12:43 PM