The Volkswagen brand had arrested its sales decline in the United States. After 18 consecutive months of decreased year-over-year volume, Volkswagen sales increased in October, November, December, and January.
• Everything but the Golf drops
• Golf R returns
• Total Golf sales up 138%
Granted, those increased sales appeared only in comparison to the prior year period, when Volkswagen was in the middle of an 18-month downward streak. Compared with the equivalent period two years earlier, VW of America sales tumbled 12% in October 2014, 14% in November, 23% in December, and 19% in January 2015. Moreover, the reported yeear-over-year improvements were mostly slight: 8% in October, 3% in November, 0.1% in December, and 0.04% in January.
Perhaps Volkswagen was simply regressing toward the mean, rather than stopping a oncoming train in its tracks. February volume slid 5% in a market which grew 5%.
Even with some new product in Volkswagen showrooms – overall Golf volume more than doubled to 3921, an increase of 2272 units – the losses reported by the brand’s other models brought the brand down by 1402 sales compared with February 2014; by 5746 compared with February 2013.
Non-Golf volume slid 14% as Beetle sales plummeted 30%, the departing Eos plunged 40%, the aged CC was down 57%, Tiguan and Passat sales dropped 10%, and Touareg volume fell 8%.
Overall Jetta volume was down 9%, but much of that decline was due to the severe slowdown of Jetta SportWagen sales – the Mk7 Golf wagon will actually be a Golf. The Jetta sedan was a relatively stable corner of the Volkswagen lineup. Sales dropped by just 4%, a loss of only 378 sales, year-over-year. It accounts for 38% of Volkswagen USA’s sales through the first two months of 2015.
Regardless, the addition of 362 Golf R sales (the previous model ended its run last summer), 130 e-Golfs, a doubling of GTI volume, and a 119% increase in Golf sales didn’t turn Volkswagen into even a moderately high-volume brand. After averaging 36,500 monthly sales in 2012 and appearing like a brand that could turn on the jets in America, it became readily apparent that a luxury SUV and an undersized and overpriced small crossover weren’t going to cut it in a market which veered away from cars toward utility vehicles. Of equal or greater importance was the fact that the brand’s core cars, Jetta and Passat, had significant initial appeal but ranked low in terms of long-lasting desirability.
That’s not to say Jetta interest completely dried up. It’s America’s 17th-best-selling car so far this year and ranked 13th in 2014. But as the standard-bearer for a brand with lofty goals, the volume it generates is simply not sufficient to form the basis of a high-volume automaker in the United States.
As a result of all the brand’s issues, Volkswagen’s February market share tumbled to 2% in 2015, down from 2.3% in February 2014, 2.6% in February 2013, and 2.7% in February 2012.
Timothy Cain is the founder of GoodCarBadCar.net, which obsesses over the free and frequent publication of U.S. and Canadian auto sales figures.
It appears to me that Volkswagen hasn’t yet figured out what kind of car Americans want. It is interesting that the Golf is the only model showing ANY growth while all the others are fading at greater or lesser rates. To quote Roy Neary, “This means something!”
VW to me would mean Volkswagen as a Corporation, not as a specific group of models. What is the groups performance like Audi, Porsche etc?
If Volkswagon wants to improve sales in North America, they only need do three things:
#1 Give us more AWD
#2 Give it to us CHEAPER.
#3 Make bigger cars.
Take Hyundai for example who SUDDENLY realized that their Genesis would sell much better with AWD than RWD.
Or Take Chrysler who put out the 200, Charger and 300 with AWD and a real V6.
Anyonee notice anything about their sales?
AWD, BIGGER CARS, PRICE TAGS THAT DON’T BREAK THE BANK.
Why should I have to even say this?
The relative success of the Golf over AWD, Cheaper and Bigger would give the lie to your argument. The Golf is none of those.
Maybe you’re looking at the wrong factors that are making those other brands succeed.
* The Chrysler 200 is the same size as the Dodge Dart.
* The Chrysler 200 doesn’t seem to include AWD.
* The Chrysler 200 isn’t exactly ‘cheaper’.
Those factors don’t seem to be the main selling points of the Charger or 300 either, though I acknowledge that they are larger than the 200 and at least offer AWD.
I would opine that it’s Volkswagen’s styling and overall ‘generic’ feel that is really hurting them here in the US. They just don’t offer anything that says, “Look at me! I’m a Volkswagen!” Instead you get, “I’m a Volkswagen. You can ignore me now.”
The Chrysler 200 is a BETTER CAR than the far more expensive MKZ.
The 200 is NOT the exact same size as a Dart.
The 200 is CHEAPER than many other cars that include the same tech/safety features – many of which do not offer AWD or a V6.
Volkswagon’s only saving grace is the American-car haters who’d rrather chase a VW badge than be seen in a Fusion or 200.
People who end up behind me all the time in traffic – or with eelectrical problems on the side of the road.
BTR…..I must admit, you are always good for a laugh. The Chrysler 200 IS NOT a better car than much of anything. Here is a couple of quotes from C/D’s review of the 200…”The 200 is far happier running errands and shuttling people about town than clipping apexes on a curvy back road” and “Although the new-from-the-ground-up 200 is a fully baked product, we can’t help but feel that drivers with sporting intentions will find it a little on the light side of hearty”.
Your always writing about putting people behind you. While its not a VAG product you would have a hard time putting my 335d behind you, especially at sustained triple digit speeds.
C&D means NOTHING to me.
Bigtrucks is going to bite your head off so I’ll just put this out there ahead of time…
The new 200 offers AWD.
Edit: Or not.
That’s nice, EChid. A quick glance at the Chrysler web page for the 200 doesn’t make it all that obvious. I didn’t feel like going into depth on it since I don’t believe that’s WHY the 200 is seeing such an uptick in sales.
INTERESTING…
The Jetta and Passat…
…THEIR LARGE CARS make the bulk of their sales…
I wonder why?
Because they are cheapish sedans and Americans buy sedans. Those two have traditionally always been their best sellers, even when they were small, expensive, and overbuilt in the late 90s/early 2000s.
Also their SUVs are wildly uncompetitive.
Apparently the only way VW can lower the price is by eliminating features and downgrading material quality. I fear any further attempts at cost reduction would result in vinyl matting in lieu of carpet and AM-only radios.
BTSR, you made a correct reference to Hyundai but for the wrong reason. The #1 factor holding back sales is the widespread belief (justified in my experience) that they build unreliable cars with outlandish repair costs. If this reputation is now truly undeserved and based on “old” VW anecdotes (although it’s never clear how old, just older than the stuff they’re trying to sell now), then they need to take a page from H/K and put 10/100 warranties on their cars. If they say they can’t afford it, then you have all the information you need to know.
You want an Audi.
Bingo – part of the strategy here is to better differentiate the brands here in North America. It baffles VW executives to no end that Americans will gladly pony up $35k for an A3 sedan, but won’t pony up $28k for a loaded Jetta GLI.
Phaeton and Touraeg should have demonstrated clearly enough that Americans aren’t willing to pay a substantial premium for a VW when better product (and service!) at similar price points is available from Mercedes, BMW, Lexus, Audi, etc.
*I* would have paid $28K for a Jetta GLI if VW hadn’t had something else within its lineup that I liked better at that price point. The GLI is a seriously sweet car, especially with the 2015 refresh.
But you’re right, all the same.
That’s what always gets overlooked. Now that VW has been moved out of Audi territory, Audi is flourishing.
VW is the people’s car. It’s not supposed to be a quasi-luxury car for people who don’t want to admit affluence.
Prob with this logic is most of the cars available with AWD are not bought with AWD.
Not to mention of the top 5 selling cars (not vehicles) in the US NONE are available with AWD. Top 10 it’s only the Fusion. Top 20 it’s the Fusion, 200 and Charger.
AWD does not sell cars.
Size doesn’t necessarily sell cars either, in the markets VW plays in. VW Passat is a living room and is barely top 30 getting outsold by smaller cars in its class.
Sometimes it’s better to be right than to be first.
AWD sells cars in certain parts of the country. Subaru for example is cleaning up in the Northeast, Mountain West and Northwest areas of the states, while being a non-factor in other parts of the country. AWD plays a big role in this because otherwise, they aren’t all that great.
One handicap VW has is that many VW dealers are owned by entities that are also Audi dealers. It is hard to say “Quattro all the things” in one store while telling customers you don’t need AWD in the store next door, especially when that store is likely struggling compared to Audi.
With respect to more AWD, don’t forget VW needs to take into account what Audi is doing, Quattro being that brands number one calling card.
For them to just make cheaper VW branded Audi’s so they can sell more volume basically removes all the VW group profit.
VW’s global product portfolio is for the most part very different to what Americans like to buy. ( for example, polo, Up! )
That’s ok. They are still the number two global automaker. If the US doesn’t want to buy millions of VWs, no problem, they will sell them increasing amounts of way higher margin Audis, and Porsches etc instead.
am I reading that chart right? Did almost half their product line move less than 1000 units? holy crap.
Volkswagen is one of the most over-rated car companies in the world, next to GM. So is there any wonder that people are waking up to that fact. Look up CR’s ratings if you want to see cars that don’t compete or hold up. Nuff said.
I cannot agree more. I actually like the styling, I like that they sell a wagon with a stick, and love the range of cars with diesel engines. But I see the Consumer Reports data (among others) and hear the stories from owners I know and just cannot even consider buying a VW. The reliability just seems like absolute shit.
It’s not so much that they’re overrated, it’s that they have a chronic inability, bordering on unwillingness, to make & sell what North Americans want to buy.
Most car companies realized that North Americans really do like larger cars and crossovers, but won’t pay that much for them. VW only reluctantly sells the Tiguan, seems hell-bent on not adding a third row to the Touareg, and generally charges a premium that consumers won’t pay.
Only when they deviate from that path do things sell well, but the impression you get is that they’d rather treat North America like western Europe (and sell at not-quite-Audi prices) or like a developing nation (and sell warmed over old models at a price cut).
They are terribly, terribly arrogant, and have been sheltered from the consequences by their relative success in China and Brazil. You don’t need to be a presence in North America to be successful, but you do need a presence in it (and every other major market) in order to be the top automaker and to isolate yourself from downturns elsewhere.
+1 on the arrogance front. VAG has never been able to accept the fact that they don’t have the same market power in the US as they do in Europe. Good lord, it took them until the MKIV Jetta and Golf to introduce proper (I’m joking) cup holders in their cars – that was 1998.
I don’t want to say that they’ve learned their lesson, but I think that recent moves demonstrate they finally understand what needs to happen – it’s just a matter of time before it does: they’ve built a substantial vehicle testing presence here, a new technical develop center with a sizeable workforce, US factory with expansion ongoing, etc.
Localized production is a major move to help make them profitable and price competitive here, and now that we’ve got MQB production in North America we’re getting goodies we never got before (eg: adaptive suspension GTIs and forthcoming AWD, non-R series Golfs).
Assuming the new Golf is a harbinger of what we can expect from the next Jetta, Passat, CUV and SUV,I think they’re going to be well positioned. It just won’t happen for another few years.
That cupholder thing is a good point. My 1997 Mk.3 Jetta VR6, which is my second car, can barely accommodate a child-sized McDonald’s cup.
My 93 Passat GLX had no cupholders. The “cupholders” were a poorly-built, poorly-installed dealer option, mounted in the passenger footwell at knee height. The passenger could easily dislodge any beverages in the cupholder, and the plastic was so flimsy it could barely hold a medium size drink without buckling during relaxed cornering.
Laughable in hindsight.
Arrogance is the only explanation I’ve come up with, since I can’t comprehend how their products could have been so far off-base otherwise. They invested significantly in cheaper sedans as Americans transitioned to more upscale sedans (both large and small), then improved the quality of the sedans as we all moved to CUVs. They insisted on continuing with an overpriced small-SUV that lost out in every category but refinement and power to the competition in the most important segment in North America.
It’s like they sat down in a boardroom one day, and discussed what they thought North Americans wanted, rather than just looking at the data like everyone else did.
“It’s like they sat down in a boardroom one day, and discussed what they thought North Americans wanted, rather than just looking at the data like everyone else did.”
It’s kind of like what some posters do here WRT the auto market. “Only way to more sales is more wagons, more diesels, more sports cars, more stickshifts… so I can buy one used”
GM & VW should merge.
GM could add European volume, VW could get lessons on REAL DECONTENTING, and Johan “Some At Me Brah!” de Nysschen could personally appear in #DareGreatly commercials & speak of authentic German engineering in the flailing Cadillacs – CT6, CTS, ATS, CT5, CT4, CT3, CT1, CT0 (that don’t sell at any price, except to GM employees as PEP vehicles – no matter how deeply discounted).
“Johan “Some At Me Brah!” de Nysschen”
He started at Audi—whom do you think came up with A4/A6/A8?—so it would be like coming full-circle.
MQB0, MQB1, MQB2…
MQB front-wheel-drive ATS-V [sexual lip bite]
Here are the bullet points:
1. Current Jetta and Passat were designed to address several issues: cost, reliability and corporate profitability. De-contenting, simplifying, bigger cars than their predecessors and less expensive.
2. These cars were also on the drawing board during the economic downturn; VW whiffed and thought that decontenting was the way to go. Honda learned the lesson quick and made radical changes. VW moves slower than a glacier and didn’t.
3. New factories in the US and Mexico were / are being built to support the North American market. The first fruit of this was the Passat, last year was Golf, VW is in the process of expanding Puebla for localized Tiguan production. Good news: we’ll get more product and at better price points. Bad news: it’s not coming in the near future.
4. VAG priorities elsewhere: Migrating as much product as quickly as possible to MQB and a focus on China. We’re seeing a company spread extremely thin at the moment. US market takes a backseat (relatively speaking).
5. VAG moving slower than molasses to adapt to US tastes and needs: a broken record, but with the new MQB assembly lines in Puebla and forthcoming modernization of the Tennessee factory it will help speed new product introductions and flexiblity
6. CUV, SUV, CUV, SUV, CUV, SUV, CUV, SUV, CUV, SUV….rinse, wash, repeat.
Long and short of it is this: VW is going to lope along at the lower end of its typical trendline for the better part of the next 3 years. What do we have to look forward to?
1. A bunch of new Golf variants that we never received before, including AWD versions, built in Puebla;
2. MQB Passat (2018ish)
3. MQB Jetta (2017-2018ish)
4. Proper SUV (2016-2017)
5. Proper CUV (2016-2017)
So, the groundwork is being put down – but we’re several years away before VW gains any real traction again in the US.
Does that mean the 2.slow can finally be put to sleep? Even the Elbonians can get more than 115HP out of 2 liters.
I couldn’t *believe* it when that engine carried forward into the 2015 refresh. But if it’s any consolation, it seems like most people know it sucks, because I rarely see a Jetta S on the road…
They need the 2.0 so dealers can advertise Jettas in the 15’s.
This post gets at the heart of the issue. VW’s entire US lineup other than the new Golf is OLD. Their products here aren’t especially well adapted to our market and even so VWoA is like 3 years behind Europe on product releases. The new Euro Passat, even a decontented version, would be a great product here. But instead we lope along with a cheapened extended version of the last model and still will for like 3 more years. If VW wants to seriously compete in the US then they need to get new models on the market here faster.
If they had a clue, they would rebadge Skodas as VWs for the US market and save on development time and cost while also providing better products.
They need to undercut the Japanese on price while offering 10 year/100,000 mile warranties as standard in the U.S., which is right out of Hyundai’s playbook (even if Hyundai has now lost the plot on pricing, which it has, which is why its sales are slowing).
I don’t know if they need to undercut the Japanese on price, but if VW were to go to a 10/100,000 bumper to bumper – THAT would certainly remove a lot of trepidation many people have about Volkswagens.
Heck, I don’t even think they need to go that far – they could go 5/60,000 B2B and make some serious inroads with that.
“but if VW were to go to a 10/100,000 bumper to bumper THAT would certainly remove a lot of trepidation many people have about Volkswagens.”
No kidding, but they’d go out of business. Most OEMs would with that kind of warranty, which is why none offer it as standard. VW would be especially vulnerable because their warranty costs per vehicle are among the highest in the industry.
good point, danio. I’d love to get a sneak peak behind the curtain of warranty costs for manufacturers. I understand why that figure is such a tightly guarded secret, but it sure would tell you a lot about the company.
Extending their warranty to 7/70k would get me more interested. 10/100k would signal that they stand by the quality of their product and I would buy it.
10/100,000 warranty is a red herring. Nobody keeps a new car for that long.
VW needs to deliver its MKV era premium feel with industry average reliability. They also need to lay off the ruler a bit and put some curves back in their cars. Their mainstreamers are slab sided in a market of curves and swoops.
“10/100,000 warranty is a red herring. Nobody keeps a new car for that long.”
It’s not. It doesn’t matter if people actually keep their car that long, what matters is that it sells cars. If it didn’t matter, there would be no such thing as lifetime warranties on products in general.
“good point, danio. I’d love to get a sneak peak behind the curtain of warranty costs for manufacturers. I understand why that figure is such a tightly guarded secret, but it sure would tell you a lot about the company.”
The figures are available in their financial statements. They account for warranty accrual costs there.
Localized production is the key, derekson, localized production.
They cannot price the Euro Passat appropriately for North America, even riding on MQB. At this point the NA Passat is a placeholder until the MQB version can be built here in 2018. Part of this is a financial move – they built the financial model on X-number of years of a product run, and likely have already fubar’d that figure with the upcoming refresh, which apparently will be far more extensive than normal (translation: hard points, not just soft points, are being changed, which means $$$$).
The focus will be on the CUV/SUV before the Passat here in North America because (finally) VW sees that this as the growth area.
I didn’t necessarily mean selling Passats made in Germany, more that they need to build that car over here like they’re doing with the MK VII Golf. They should’ve converted Chattanooga to MQB production far earlier than in preparation for a 2018 model. As you say, they realized the Passat needed enough changes to do a “heavier than normal refresh.” Well they should’ve just taken that chance to shorten the life cycle and get an actually competitive product on MQB to market sooner rather than dump more money into redesigning the model on the old platform.
When the Chattanooga factory opened in 2011 the first MQB product was a year off for Europe (Audi A3). The plans for the Americanized Passat had been in the works for quite a number of years prior to even the factory opening and really only got the green light because it shares so much with the Chinese variant.
I chalk a lot of this up to bad timing and resources being stretched too thin.
We’ll get that MQB Passat in a few years.
On the subject of rebadging Skodas: this has been discussed in many places because Skodas are really nice cars. Same issue as with other products: VW needs localized production to make these things profitable.
Also, if you take VW’s math, they claim that about 70% of the development and production costs for a car are from the front bumper to the pedal box in the cabin (eg: drivetrain). Since drivetrains and drivetrain installations are now standardized across the MQB portfolio there’s not much savings in rebadging a Skoda, especially if you’re going to have to import it.
On the subject of rebadging Skodas: this has been discussed in many places because Skodas are really nice cars. Same issue as with other products: VW needs localized production to make these things profitable.
Also, if you take VW’s math, they claim that about 70% of the development and production costs for a car are from the front bumper to the pedal box in the cabin (eg: drivetrain). Since drivetrains and drivetrain installations are now standardized across the MQB portfolio there’s not much savings in rebadging a Skoda, especially if you’re going to have to import it.
You know what would make interesting reading? Some insider comments from someone in at least middle management on the business side at VAG USA.
This is an interesting piece on the VW dealer body: http://www.autonews.com/article/20150123/RETAIL06/301249971/volkswagen-dealer-weve-got-to-get-in-the-game
Thx for the link.
That was a really interesting read. Particularly the part where he said that in the last 3 years or so warranty work has fallen off 50 to 60%.
I also took note of the claims that the next Tiguan will compete with CR-V and RAV4 on price, have 2 and 3 row versions, and offer a diesel in the US. If they can actually deliver on that, as well as the CrossBlue (or whatever they end up calling the thing) come out and not be priced ridiculously like the current Tiguan is, VW might actually gain some decent market share.
Yeah, that really caught my eye as well.
Friend who runs an Audi dealership has similarly commented that since the MLB based products were released they’ve seen drops of 50+% in warranty work.
That’s some big bucks.
I find it *so* ironic the US VW dealers actually are struggling with an improved product due to less warranty work which they seemed to have relied on in the past when sales were tough.
I find this paragraph to be a particular nugget of wisdom (emphasis mine):
“We lost so many deals to Honda and Toyota because they were $1,500 cheaper, and they had a backup camera. *It’s the smallest points of defection* that McNabb, Horn and Barnes really took a hard look at. This really started toward the end of 2013 in evaluating where these defection points were. The good news is all of this is easy to follow and you can quantify it. *When you look at the defection points, we have filled the gap and in some cases exceeded the gap* needed in these defection moments in price and content.”
Very good article. It was extremely candid.
Interesting, but still seems a bit rah-rah. The big issue with Volkswagen for me right now is their abject lack of urgency. Everything is always 2-3 years away and the dealers need help now. This guy works for a Hendricks store, which is great, but we had one VW dealer in my area close last year and another – the second oldest in the country – is closing at the end of this month.
regarding golf sales; i expect it will look a lot like jetta and passat – high at first until pent up demand is met then a taper.
recall that passats were available in 2010 then not available for almost a year before the new americanized passat became available as a 2012 model. a successful manufacturer does not leave a gap in product availability.
the same thing happened to the golf. there were very few golfs available in the early half of 2014. dealers were selling out old 2012 and 2013 stock but waiting for the 2015s to come online. europe had them but we got them ca. one year later. initial north american golfs were stripper models that fulfilled the low cost promise but can still be seen on dealer inventories. i expect golf sales to taper within the year.
the jetta was different. vwoa went from the old to new style almost immediately. despite the auto press disliking the new model it sold – and still does.
the more worrisome aspect is that vwoa sales appear to be linked to steep discounts once the taper begins. that is a sure sign of a saturated demand market.
i agree with bigtruck that vw needs awd, competitively priced vehicles, and a small suv that creates a stir in the public. without it they will not get dealer traffic.
consider what would happen if there was a golf wagon with awd to go toe to toe with the subaru outback or forester? esp if they could undercut the price by $1,000. personally i would appreciate a passat wagon (see my title) even the new for europe all-track if it was affordable. and no, by affordable i do not mean audi a4 allroad affordable. that is way past my price point.
respectfully submitted by an admitted vw fan
We didn’t get the Golfs around one year later. It was more like 3 years. The Mk VII Golf was a 2012 product in Europe! It’s a great product, but there’s absolutely no reason that in 2015 it should take a global company 3 years to get a product from Europe to the US.
As for your last point, VW is bringing a 4motion version of the Golf Sportwagen to the US for 2016. It should do well if marketed and priced well, it is as you said a great car to compete with Subaru’s offerings.
derekson –
Once again, localized production. The Puebla factory expansion to support MQB started in 2012 with the initial production runs beginning in January 2014. Infrastructure takes time to build, plus you have to keep the finance weenies happy while you spend their money to do it. ;-)
All things being constant, you’re right: VW should have things ready to go out of the gate for a simultaneous launch. Reality being the gremlin that it is, there are priorities and budgets to be balanced.
While I agree with the taper theory, I think the new Golf has a *lot* more going for it than previous models ever did:
1. American tastes are slowly changing and becoming more accepting of hatchbacks;
2. New Golf is substantially roomier and far more refined than previous models (and much of the competition);
3. Far more options and versions of the Golf than ever before, including the upcoming wagon, upcoming all wheel drive, e-golf, etc.
GTIs started trickling in Memorial Day weekend last year and regular Golfs weren’t available in bulk until July, so we’ll have to wait until this autumn to get a better read on the sales trends.
To be fair, the Golf wagon existed before it was just branded as a Jetta.
The big benefit is that the Golf finally caught up on the power and fuel economy front. My mother *badly* wanted to buy one instead of the Civic she ended up with, but she couldn’t overlook the fuel economy in the end.
Hopefully sales will be better. I like them.
The strange part about VW’s fall from grace is how unnecessary it has been. They were ahead of the curb rolling out high-volume turbocharged cars, but the lack of reliability dug a shallow grave for VW and its customers.
Rather than spending all of their time and advertising dollars, convincing Americans that German engineering is reliable again (with substance, not phony claims about 100,000 mile cars), VW has persisted with lifestyle advertising, which makes people think VW’s are still 4-wheeled traps for emotional car buyers and suckers for initial quality.
At this late stage, it might be a lost cause. CAFE regulations are going to dominate the car market, unless Congress makes a revision in 2017. VW can’t out-appliance the American and Japanese auto industry, and they don’t appear to have an alternate strategy. Diesel isn’t going to win the day.
i like the ideas of better new car warranties and rebadging skodas as vws in north america.
iirc kia and hyundai both had 100,000 mile warranties – and backed them with no questions – when they were going for a foothold in the market. where is their market share now? where is vws? product mix helped but so did the extended warranty.
market is growing for small cuvs; surely skoda has something to offer.
redwagon – see my previous comment about localized production and where the bulk of the cost for new vehicle engineering and manufacturing come from. While Skoda has a great portfolio, VW wouldn’t save much in the way of time or money by reskinning and importing them here. Plus, they’ve already built a financial model around the current product cycle. No way the finance guys are going to let them ‘eff that up, especially when you’re already running on ridiculously slim margins.
When the new Jetta and Passat arrive here, produced locally, they’ll share 70+% with those Skodas.
While it sucks from a sales and brand perspective, the US market will just have to ride it out until the end of the product cycle.
hreardon, i see your comments and agree with localized production my comment was added to the que before your original replies to earlier comments farther up.
market share means a lot in terms of future positioning. with an expanding market in north america but loss of market share for vwoa, does it make any sense to rebadge skodas and gain market share – even if it is at a ‘manageable’ loss? or does this sound too much like gm? i know in oil no one wants to shut down when prices are low b/c they will lose contracts and then market share when prices rebound.
Gotcha, redwagon.
On the subject of marketshare: I’m not so certain that chasing share at the expense of profitability (or customer satisfaction) is much worth it. At this point, I’d say that unless they’re pouring unholy amounts of cash on the hood to move metal, it’s probably worth it to just ride out this wave and then wow everyone with the next generation product.
The Tiguan is so old that it has competed against THREE generations of Subaru Outback. CUVs are what the market wants now, for better or for worse, and VW simply doesn’t have anything sized or priced appropriately for North America. I know VW didn’t have a crystal ball when they promised to sell 800,000 cars per year in the US, but it wouldn’t have been rocket science to acknowledge the CUV segment.
The upcoming Sportwagen, just like the current Golf before its US release, is VW’s perpetual “fresh young pitching talent” in terms of hype. Yes, they should sell more than their predecessors, but VW is still missing the forest for the trees. They are niche products in the US.
Golf GTI or R wagon = past sins forgiven in the Quentin household.
I know the above scenario won’t happen because there simply aren’t enough weirdos that like hot wagons out there, but it highlights that VW needs to decide if they are going to go mainstream or niche. The Jetta has 4 different engine variations (1.8T, hybrid, TDI, 2.0T). That is bonkers when Toyota sells 2 different engines and the 2nd variation is basically just a variable valve lift head on the normal 1.8L block. And Toyota sells like 4x as much volume with fewer variations. All those variations cost money and that hurts VW from making just one variation that is competitive in both price and product. They don’t get the economy of scale advantage because they don’t sell enough to justify all those variations. On the sales end this hurts, too. A buyer walks into a VW dealer. Which engine? Which exterior color? Which interior color? Which trimline? Good luck finding exactly what you want out of all of those variations. If you are going to try to compete with the mainline brands on cost/volume, you have to play the game the same way they do. If you decide to play the niche market, you need to fully embrace it and give people what they want for a premium (MINI does this, but at unknown profitability and long term viability of this method). Maybe it costs an extra $2k for a Golf GTI Variant, but improve the ordering process to not be 4 months* and the color pallet to make it worthwhile to pay that premium. People may pay a premium to feel special without having to jump up to a luxury car.
*My ordered 2007 GTI took 4 months to arrive. My wife’s ordered 2005 MINI took less than 2 months and had way more customization options.
The cost difference between all those variants isn’t as high as one would think, especially under MQB where all of the engines are modularized and the powertrains are standardized for both assembly and design. Whereas in the past a 2.0TFSI engine would be built differently for an A3 versus a Golf GTI, they’re now virtually identical, sans the strap-on MPI system which all US spec A3 and GTIs lack.
Where I do agree with you is on packaging, logistics and having the right stock on the shelves in the right markets at the right time. Managing that has to be a nightmare job. I still don’t understand why VW’s localized plants cannot handle a higher level of customization and a shorter delivery timeline than some of the competition (Mini being a great example). I did hear a talk a few months back where VW discussed a project in the works to improve the availability of custom builds and build times, but I’ll believe that when I see it.
It seems like VW has done away with individual options anyway. On pretty much all of their cars, you basically just choose trim, transmission, and color. A few offer parking sensors or HID headlights as option packages, but other than that it’s basically just S, SE, SEL, etc. There’s really no point in custom ordering a VW when you can probably find whatever combination you’re looking for on a lot somewhere. I suspect they’ve moved to this more “Honda-like” model of option packaging to reduce the number of different combinations for production and to encourage purchases from inventory rather than custom orders.
I agree that having 4 different engines in the Jetta is a complete non-issue. VAG has a ton of different engines they can put in the PQ35 or MQB products, so it’s not like they’re building any of those specifically for the Jetta. Though they really should put the 2.slow out to pasture and replace it with the 1.4 TSI or just make the 1.8 TSI standard.
It still costs money to offer those variations even if they are plug and play. You have to have space in the assembly plant for 4 different engines when the chassis rolls through, you have to have supplier engine plants that provide the right volume for all of those types, and, the biggie, is that you have to federalize all of those different variants for crash testing, fuel consumption, etc. You have to do durability testing for all variants because they will interact with the chassis differently (weight of the different engines will impact suspension tuning, for example.)
My basic point is that the leaders of the segment move huge volume with 2 engines. If VW wants to compete on price and thus volume, they need to reduce R&D and manufacturing cost to give the buyer the same or more for their money than the competition. A great way to do that has been reduction of variations which is where we see the industry heading… (rather than cheaping out the interiors that they used to be known for). If they want to just be profitable with low volume, they need to raise the prices and offer a vehicle that people are willing to pay more for. Right now they are lingering somewhere in the middle. You need to either commit to volume or niche.
Having the MQB platform accept basically every engine makes perfect sense when the platform will be sold in many different markets with different tastes. That makes it easy to tailor the powertrain to the market while keeping the chassis common. But within the same market, I’d imagine your average Jetta driver is going to be fine with one or two engine variations. Maybe just the TDI and the 1.8T (or a 1.6T) are all that is really needed and they can spend some of the money they put into the GLI and hybrid on the interiors or tech of the TDI and 1.8T models to make them better at being viable competitors to the volume cars like the Cruze, Corolla, Civic, etc.
I’ll admit that I was surprised when Audi announced the 1.8TFSI alongside the 2.0TFSI for the new A3 sedan. They are both very similar power plants, so I suspect this was a move to give Audi a lower price point. It’s really a no-duh to move up to the 2.0TFSI + Quattro model for the small bump in price, so I would imagine that the overall cost to Audi is low enough to justify having both models – otherwise, why bother?
All in all, I agree with your point, Quentin: less can very well be more. I do know that part of the big cost-cutting drive in Wolfsburg is focused on eliminating slow selling models and options and consolidating engine programs. I imagine that the 2.slow will die for North America in the next update.
VW’s also considering bringing the 1.4TFSI as a base engine in the Golf next year while keeping the 1.8TFSI and the TDI and potentially adding the 1.4TFSI hybrid Golf as well. Insanity, I know, but I’m sure there are some underpaid interns working out the math to maximize profitability. ;-)
The new Golf is getting rave reviews but just try and find one.. dealers have very few and they are either high end overpriced SEL’s or low end S models with nothing on them. Desirable mid-model SE’s are rare. VW appears to be squandering yet another opportunity…
I can attest to this. My wife and I were looking at cars last month and the local VW dealer had a bunch of GTIs and TDIs and pretty much nothing else.
I still don’t completely understand the fascination people have with VW. I’ve always found their cars to be sort of bland on styling with the exception of the GTI and its plaid interior, but even then they seem sort of boring. Maybe their sales are down since they decided to sell cars short on personality, decided to give Americans lesser quality in terms of materials and driving dynamics in a time in which just about every other automaker is improving. Sad to say even Toyota to an degree. Add to it the quality issues that people refer to and its no wonder why sales are hurting.
The 2015 Jetta rectified a lot of the de-contenting that took place when the Mk6. was released in 2011…but it’s still pricey compared to what you could get from other automakers for the same money.
Back in the late ’90s when I was starting out in the work world, *everyone* in their 20s wanted a new MK4 Jetta or MK5 Passat. It was “the” car to own at the time. It was a combination of the product being (on the surface) much nicer than most of the competition and the fantastic work that VW’s advertising agency was doing at the time.
The shine disappeared soon thereafter after VW essentially abandoned and pissed off half a million customers over the next few years through sheer arrogance and wretched support. They literally scared an entire generation of car buyers away from the brand by how lousy they treated their customers.
Fast forward and what VW offers today, even without the previous years’ pains, simply doesn’t offer enough over the competition to warrant a second look. Golf+GTI – yes, these are the kinds of class leading products VW needs; But the current Jetta and Passat just reek of building to a price point.
I have a VW and there is a quite a bit about the brand that has appealed to me since 2006 when their reliability finally crawled out of the deepest recesses of the basement.
I like the conservative exterior styling. The Golf, Jetta, and Passat aren’t flashy but they rarely look cheap like the current Civic or Camry, either. That trend has continued to the interiors, which–with the exception of the current Jetta–have been built of materials that generally exceeded the competition by a fair margin. I’ve found VW seats and ergonomics to be exemplary for the price point.
I also like the way they drive. They split the difference between Mazda and Toyota, blending some driving enjoyment with noise suppression and refinement. In the compact segment, that has been a rarity. The new 1.8 turbo is a real gem of an engine.
You trade a lot of infotainment and other tech for this, but that doesn’t bug me since I still haven’t been enslaved by a smartphone.
Point for point, I concur.
I agree. My daughter has a 08 Rabbit and I have a 12 sportwagen tdi. There are no other small cars that have the driving dynamics of a VW. So far both of ours have been trouble free.
VW needs to stop targeting Toyota- and GM-levels of sales in North America. At least for Toyota, a reputation of reliability is what attracts most buyers.
VW does not have that reputation. Their cars are nice, but only when brand new. So a 3-step plan for them to get more sales is:
1. Make the NA-market gas powertrains reliable
2. Looooong powertrain warranty (like, Hyundai 10-years long)
3. Advertise the heck out of the warranty
I wasn’t aware that we Jetta SportWagen buyers were such a big deal…especially in my area, where it’s a very rare car.
Very few Americans want a German car that isn’t a luxury car.
Yet VW keeps directly or indirectly touting its German heritage. Das Auto. Fahrvergnügen. Drivers Wanted.
This is niche marketing, not mass marketing. It makes no sense to sell European-style cars with Teutonic branding, then be shocked that the volumes are low.
Not to mention the fact that most of the cars—including my SportWagen—are now produced in Puebla, so they have to say “German-engineered”.
Depends on where you live. VWs are quite popular in New England, and in large measure because they are an affordable alternative to the more expensive Germans. Conservative good looks, nice interiors, nice driving dynamics. A wagon and a hatch available. If I was on a budget I would certainly be driving one. Many of my friends do, very happily. But New England is literally and figuratively the closest part of the US to Europe, so it is not particularly surprising to me that what works there works here too.
I now work for a VW/Audi/Porsche dealer. I had to move our Routan courtesy shuttle today and as soon I touched the shifter, and I could feel the budget Chrysler quality. Some Chrysler’s have some very good fit and finish, but their vans have really weak feeling shifters. So I looked around and saw more plastics that were not much better than a Caravan and slightly worse than a T&C. Routan is a great name attached to a less than compelling van.
The problem is that VW sees itself as a premium brand while in the US it’s seen as an overpriced mass-tier brand, especially after they redid their lineup to make it less appealing to the stealth-wealth buyers and encouraged them to move up to Audi.
I have always liked Volkswagen’s yet even though I do like there cars what I don’t like is the Dealerships in the USA. The sales practices that they use are deceptive. They give you an OTD price have you come in they try to charge you thousands more than the vehicle. Or when a vehicle is going to be discontinued they lie and say that the vehicle is not being discontinued. Or if there is a rebate on a car and you ask them about it they say there is no rebate and when you show them that there is one they say they were not aware this and thanks to bringing it to there attention. Sure there are many car dealerships other than VW that use deceptive practices but VW as a whole endorses this. When I had a problem with a VW dealership I filed a complaint with VW America. The advocate case worker told me that “let’s be honest we only sell our vehicles to the dealer and once he buys our cars then what ever happens between you and dealership is no longer our concern” So the problem is that if VW America is willing to admit they look the other way when there is wrong doing with the dealership then how do they expect to have return customers. This is why sales are decreasing and Subaru sales are soaring.