Autobild reports that the soon-to-be-Porschefied Volkswagen Group is adopting a low-price strategy for the US market. Beginning in 2011, VW US will sell several relatively cheap, not-for-Europe models: a $20k frumpified Passat, a $15k Jetta and a $25k Passat-sized SUV. (India and China will also be blessed with these Vee Dub strippers.) VW prays hopes this "mid-term strategy" will boost their American sales from last year's 235k units to a cool million vehicles per year. Autobild reckons this plan creates a conundrum: how to prevent gray-market exports to Europe? How to protect VW's international brand values? The magazine recommends introducing a new low-price brand (e.g. Toyota's Scion and Renault-Nissan's Dacia). Meanwhile, in Tokyo, VeeDub's upmarket sib has introduced the new, slightly-larger-than-Mini-sized A1. Badge-engineering alert! Although the new Audi A1 shares its atrocious gaping grille-mouth with the Q7, it sits on the VW Polo platform. The model also introduces Audi's new soft-touch, synthetic cow hide, trademarked "velvet leather." As Grace Jones will tell you, it just doesn't have the same ring to it as warm leatherette.
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Hey Volkswagen, why don’t you just start selling Skodas in the US and Canada as your down-market brand, VW as mid-brand and Audi stays up-market?
Americans don’t have any idea that their British cousins used to laugh at Skoda owners, nor do they care.
Maybe this plan’s just too easy, huh?
It might work. VW’s current strategy of offering Chrysler quality at greater than Honda prices hasn’t been working very well.
Volkswagen is slowly turning into the GM of Europe.
They have many brands and don’t know what they stand for.
You have Skodas which are light years ahead of VW and Audi in terms of reliability, VW and Audi competing against each other and brands there for the grace of God (i.e SEAT).
One thing VW need to sort out is their pricing. DId you that for the same money for a fully spec’ed Golf Plus (£20K) you could buy a fully spec’ed Audi A3 for the same price. It’s luxury competitor!
VW is slowly turning into a mess. Mind you, it does have good diesel powertrains and decent quality cars (not reliability).
VW needs to decide who its target customer is. It doesn’t build appliance cars like Honda and Ford, but it’s had quality issues and its prices are higher. Reality is what it is – if they want the Passat to be considered by the average buyer as an alternative to the Fusion or Accord or Camry, the base price has to come down and they have to be reliable. All the nifty features we take for granted on German cars are of limited value when the car is in the shop…
How to prevent gray-market exports to Europe?
Nothing to prevent, I presume.
Although you could save between 15,000 to 20,000 Euro by re-importing e.g. a brand-new, fully-loaded E-class Mercedes, nobody seems to take this opportunity here. The same is true for BMW and Audi.
So, why should I re-import a down-marketed Passat? There are other options here, if I really want to drive an ugly, cheap car (c.f. ).
Haha, that caption says it all!
I thought the car was good looking at first, then when I read the caption, I nearly spit up my coffee!
Silly VW… 2011 before they can start selling small cars? I don’t get why VWoA won’t start selling the City Golf and City Jetta in the US. They’re selling like crazy in Canada since the TDI is no more for now. But in the US, dealers have to try to move expensive Jettas, Passats, Gabbits, and Eoses (Eii?). Sure they’re nice enough looking (except for the Jetta), but reliability sucks, and 99% of the dealers are as crooked as they come. First they need to fix the dealer network, hire techs that aren’t parts replacers, and then focus on selling decent cars that don’t break so often. I don’t see how it could be difficult to bring the City Jetta/Golf in, and immediately boost US sales. VW has no clue how to sell and vehicles and keep customers coming back in the US. The TDIs sell themselves, but all the current gas models that they offer really are pointless.
The one thing that made VW special in recent memory was the fact that they were actually nicer and richer feeling than their japanese and USA counterparts. VW problems was that its cars were for the most part absolute junk!
Selling decontented cheaper verisons of what folks in this market now consider to already be poorly build cars will only hurt VW more in the long run. This move will appear as though VW is admitting that their products suck and do not command the premium price that VW is currently charging.
Today I would love to buy a new DSG equiped GTI. The thing that is holding me back is VW glaring lack of reliability and quality in their current line up of cars. What makes me want a VW GTI is the fact that it is a nice car made with interior materials that I can not get unless I am willing to spend about 10grand more for an Audi, BMW or MB. This is the core difference between VWs and such cars like a Mazda3.
VW needs to understand in the USA market they are now loathed as much as the Big2.8 by many of the costumers that they have burnt over the last 15 years. Americans are NOT asking for cheaper VWs, we have many other choices available to us that are quite good. We are looking for VW to make better reliable cars, and are willing to pay a premium for them.
VW going down-market will only give Toyonda a chance to total bitchslap them senseless!
@whatdoiknow1- he is dead right. This will continue their decline. They make very nice looking cars that are too unreliable. Adding more brands to the mix will just make things a bigger mess. Selling cheaper cars will only hurt the desirability of their other cars.
They act like a company in a tough bind, and they aren’t. Improve quality. That is it. Stop wasting money on ridiculous prestige products and focus on core competencies. The prestige comes later, after you have earned it, and VW has not earned it.
VW has already started this downmarket move in Canada, with special Golf City and Jetta City models. They have been on the market for over a year now and they are sold out all the time.
The 2008 Jetta City is basically a previous generation Jetta with a 2008 nose and tail. MSRP = $16,995 in Canada. Loaded = $20,000, including a 6 speed automatic and sunroof. A very nice car at that price point in Canada.
http://www.canadiandriver.com/testdrives/07citygolfjetta.htm
Now, if they could just work on the quality thing…
Good idea..take out all the electronics and I’d consider a Passat ;-)
Last night I had the distinct privelege of seeing a 2006 VW GTI go through the lane at a public sale. It was only 10 minutes from my home and… heck, I had a little time to kill. Unfortunately it was….
1) Belching black smoke under heavy acceleration
2) Had the check engine light on (about 15% of the factory sale vehicles for VW have this helpful feature illuminated) along with the ‘Service!’ light.
3) No sunroof or leather, but the interior was still in nice shape.
It had 44k, the final bid in the lane was $12,500…. I was thinking it would go for $13k so it wasn’t too far off.
As for grey market, thank God for it because it’s what enables me to drive the only 1977 Mercedes 350SE in the East Coast… and I only had to wait 30 years to buy it for $250.
Volkswagen will never greatly increase their sales. Most people now will never tolerate unreliable cars.
Did anyone hear about VW plans to become biggest car maker in the world and becoming the new Toyota? I killed myself laughing when I heard that.
Source:
http://www.autoblog.com/2007/09/24/toyota-to-be-overtaken-in-2015-by-the-germans/
Their cars are overpriced and unreliable (in comparsion to the Asians), but the one thing they do have going for them is the quality of their cars. It is pretty high.
What’s stopping growth in North America (apart from their unreliability) is their insistence of offering diesels, when diesel hasn’t really taken off. I’ve said it before about German makers, their lack of foresight to new technologies and they way they are dragging their heels of hybrid technology is shocking and will be the undoing of them.
They are unstoppable in Europe, but that’s because we drink diesel for breakfast, for some bizarre reason…..
Katie,
don’t misunderestimate VW.
Quality is improving; as a matter of fact the Golf MK5 (albeit not hecho in Mexico) has quite excellent quality statistics — almost of Japanese ranking. VW is leading with some technical innovations such as the DSG. VW is great in suspension technology. VW’s Audi affiliate is the only new luxury brand in recent decades, next to Lexus, to have been established successfully.
All this, VW did with a goverment-majority shareholder and exceptionally powerful labor unions. And this situation has recently completely changed. Porsche has its hands on the reins now. The Unions and the government have lost much power.
Sure there are multitudes of problems remaining. Quality is still spotty for many models. Styling is crappy too in some cases. VW in the U.S. is a catastrophy. But the smart money is betting that VW is a buy — look how its stock market price has doubled this year. For me, the evidence is not yet clear but I’ll be watching VW with a whole lot less scepticism than you.
Does VAG actually have anything to do with the development of DSG? BorgWarner is an American company, last time I checked, and presumably free to sell their tech to whoever cares to have it.
Mr Martin Schwoerer,
It’s not just reliability which is causing a problem for VW, it’s also their lack of foresight. For some reason, they won’t stop dragging their heels over hybrids and insist on pushing diesels, which (as I found out, much to my shock) don’t actually generate much better MPG as petrol engine*.
I’m particularly hard on VW because I KNOW they can play the game better than the Japanese in some instances, but they don’t seem that bothered about pushing forward. They’d rather stay in second gear….
* = A VW Golf 2.0L Sport TDI with a DSG gearbox generates 34.4mpg in urban conditions and 54.3mpg in highway conditions. Its CO2 emissions are 164g/km.
A Toyota Auris 1.6 T-Spirit with an Multimode gearbox generates 33.2MPG in urban conditions and 47.9MPG in highway conditions. Its emissions are 161g/km.
Not much difference (depsite Diesels being SO superior), but there is one big difference.
The VW Golf Plus is £20082 and the Toyota Auris is £15545 with more as standard.
tentacles: thanks for the information; I stand corrected. I was thinking of the PDK (Porsche Doppelkupplungsgetriebe), for which the first studies took place in 1969. No excuse of course for forgetting that BorgWarner was the inventor, VW just the first and major licensee.
@KatiePuckrik:
VW Golf GT Sport (petrol) 1.4 TSI 140hp, 29.7mpg urban, 49.6mpg highway, 169 g/km, GBP 16727.
Btw, according to Toyota.co.uk the Auris does 166g/km. And has 16hp less. And 9 mph less top speed. And is 1,7 sec slower to 60 mph. And it looks butt-ugly compared to the Golf. So your comparison looks skewed, especially considering the Auris is also sold with Diesel engines.
We all know you don’t like german manufacturers, however a little fairness can raise the level of every discussion. Oh, and Hybrids are not and will never be the ultimate solution.
Mr Vega,
You’ve totally missed the point of my post. My point was to show you how diesels aren’t that much better than petrol engines. Hence, why I compared a diesel Golf Plus to a Petrol Auris.
Also, my facts were spot on. I compared the Toyota Auris T-Spirit 1.6 with a multimode gearbox which (according to Toyota.co.uk) emits 161g/km and is the top spec’ed Auris against the top spec’ed Golf Plus.
I concede that the 0-60mph time is 1.7 seconds slower, but I compared a Sport VW against a regular Auris.
If I’d compared a diesel Auris against a Golf Plus diesel, then all I would prove is whether Toyota diesels are better or worse that a VW diesel (Toyota would lose because VW KNOW how to make a good diesel engine). But that wasn’t the point of the exercise. The point was to show how a diesel powertrains isn’t that much better than a petrol powertrain.
As for the Auris looking ugly, that’s a matter of opinion. I, personally, think it looks rather handsome.
With respect, if you’d read my post properly, you’d see that I wrote that the reason I’m particular hard on VW is because I KNOW they can play the game better than the Japanese, in some instances, but instead they’d rather stay in second gear. We on TTAC are always hard on Detroit for their inability to compete, the Germans are not exclusive of harsh criticsm for the same reason, in my eyes.
And for the record, I never said that hybrids are the panacea the auto world needs. I was saying that hybrids aren’t being given a fair shake by the Germans, because they believe their diesel powertrains are supreme, which they clearly arent. Just compare a Polo Bluemotion to a Toyota Prius and you’ll see what I mean…..