By on July 24, 2013

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Despite planning to sell 486,000 units in America this year, Volkswagen has trimmed its sales targets to 440,000 units, after shedding market share in the first half of 2013.

The slowdown is sales has caused Volkswagen to offer aggressive incentives on vehicles, such as 0 percent financing across the board, while workers at its Chattanooga plant have been laid off. Inventories of VW cars remain high, and have risen to 105 days supply as of July 1st, up from 92 days in June. Dealers are crying out for key products like a mid-size crossover, but so far, Volkswagen has only announced a revival of the failed Phaeton luxury car.

On the dealer side, Volkswagen has been struggling with an unhappy dealer body, which was ranked last in a NADA survey. A reworking of VW’s bonus complicated bonus system for dealers, which ended up undoing some of the changes made in January 2013, helped boost satisfaction levels, but dealers are still facing a tough time after three years of rapid growth.

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49 Comments on “Volkswagen Cuts Sales Targets For US Dealers...”


  • avatar
    Hummer

    Why isn’t the touareg brought up when mentioning midsize offerings VW has?

    • 0 avatar
      dal20402

      Because it’s a 5500-pound full-size monster. They are talking about something smaller, lighter, and more efficient to compete with products like the Pilot, Santa Fe, or Highlander.

      • 0 avatar
        Hummer

        I was just looking at one of these on the road yesterday, it’s not very big, seems smaller than an Acadia, how can it weigh as much as a Tahoe?

      • 0 avatar
        Beerboy12

        I don’t think it can compare to the full size BOF SUV but then it is too big to be a mid size. It was not designed to compete with full size SUV’s, it’s more a BMW X5 competitor.

        • 0 avatar
          Hummer

          Makes sense, its definately overweight for a being a midsize CUV, I see now why the dealers are wanting a better product.
          Though with that said I would love a V10 TDI touareg.

      • 0 avatar
        LeeK

        The current Touareg is 4400 pounds, not 5500. It’s problem is price. Starting at the mid 40k level, it goes up to 60k for a top of the line Hybrid. Buyers cross-shop the X5, Q5, FX, Grand Cherokee, and MDX. Even though it is an extremely competent SUV (see this month’s Car and Driver comparison of diesel-equipped vehicles — it comes in first), the problem is that Volkswagen has no image in either expensive luxury cars nor rugged off-road SUVs in which to entice potential buyers.

        • 0 avatar
          whynot

          Bingo. Most buyers don’t care about how much a car weighs, or how good it is offroad. They care about price.

          Starting prices:
          Highlander: $29,000
          Venza: ~27,800
          Pilot: $29,500
          Santa Fe: $28,600 (Sport is ~$25,000)
          Traverse: $30,000
          Explorer: ~$30,000

          Tuareg: $44,000!

          VW dealers want a midsize CUV that starts in the mid to upper 20K, not something twice that.

    • 0 avatar
      philadlj

      Too expensive.

  • avatar
    segfault

    “unhappy dealer body”

    I guess the dealer angst flows straight through at VW. Enthusiasts hate the notoriously inept dealer service departments, and the dealers hate VW corporate.

  • avatar
    mike978

    It is clear VW needs a proper CRV competitor as well as a proper Pilot/Highlander competitor/. Both their current products the Tiguan and Toureag are too expensive and too small to directly compete.
    The other issue they faced with the Passat and Jetta was inferior fuel economy. Getting 31/32mpg highway is just poor in this day and age for either class. At least the 1.8T may well rectify that.

  • avatar
    Beerboy12

    VW does have a mid-size SUV in the works… the Crossblue

  • avatar
    NotFast

    Any idea WHY their sales aren’t meeting target? US auto sales are flying high… were their numbers simply too aggressive.

    I see unhappy dealer body mentioned, but surely they’re not trying to sell *fewer* cars.

    • 0 avatar
      hreardon

      See my post below. The root of the problem is that the competition got really good, a lot faster than VW expected. Suddenly their product doesn’t measure up to the likes of the Fusion, Accord, Mazda 6, etc.

      Combine that with really non-competitive vehicles like the Tiguan, a shortage of Golf+GTIs for the better part of the next year and the Jetta which is the 21st century’s Carolla and you’ve got a recipe for disaster.

    • 0 avatar
      jmo

      Not hitting target?

      I’d say they aren’t offering a competative product. I’m on my third new VW since college (two Passats and a GTI) and I’ve been very happy with them. But, the market is vastly more competitive now. A 1998 Passat vs a Oldsmobile Intriuge or Hyundai Sonata was an easy choice. A 2013 Passat vs a Kia Optima, Mazda 6 or a Fusion? Totally different arena.

      • 0 avatar
        hreardon

        jmo -

        Really great phrasing there. That’s the EXACT problem.

        Frankly, I’m shocked Volkswagen misread the North American market as badly as they have at this point in time.

  • avatar
    hreardon

    Volkswagen has succeeded in improving their overall quality ratings but in the process they have becoming extremely uncompetitive in all of their markets except the low volume ones (think Golf/GTI). The Tiguan is a poor match for the CRV/RAV4 audience; the Touareg will never compete with the Highlander, Arcadia, Enclave; The Passat is being severely outclassed by the Accord, Mazda 6, Camry and Fusion.

    The list goes on. At the same time Volkswagen dumbed down its product line the Japanese and domestics stepped up their game to the point where VW products look bland, sterile and remarkably uninteresting. Sure, Volkswagen has improved their reliability but their desireability is likely at an all time low.

    A number of years ago I had said that the biggest threat Volkswagen faced was that the Japanese would take their reliability and build upon it with interesting designs. I wasn’t expecting Volkswagen to dumb down its product line to match them and in doing so, essentially negate the reason most people purchased VWs.

    • 0 avatar
      jmo

      Totally agree with your analysis.

      • 0 avatar
        JSF22

        I likewise think hreardon is dead on with this analysis. I would only add that as the Asian and American manufacturers make their cars more engaging, and VW removes content to sell cars cheaper, VW will alienate the faithful faster than it will gain new loyalists. I’ve rented several new Jettas, and about all I can say is, it’s OK for a 17K car. But a huge proportion of the people who want a car like that are car-haters who just want a car that won’t give them any grief; VW isn’t giving them any compelling reason not to choose the Toyota or, God help me, the Hyundai that they are confident won’t let them down.

        • 0 avatar
          Summicron

          “But a huge proportion of the people who want a car like that are car-haters who just want a car that won’t give them any grief..”

          Zackly. And they are an iceberg to car-guys’ icecube. Stories get around and VW never enters most peoples’ mind when car shopping. God, what a flip-flop from my early years.

        • 0 avatar
          hreardon

          Bingo. If you want a reliable appliance you sure don’t go looking for a Volkswagen.

          Regardless whether that statement is warranted, it’s the reality of the market today. Try as they might, Volkswagen can’t shake that stigma.

          Enthusiasts and loyalists like me are looking to move on to other brands.

    • 0 avatar

      The other question is how much they’ve improved their reliability, and whether it is across the board. People like Honda or Toyota because they can generally go out and by any model and expect it to be reliable (obviously in reality this has some big exceptions: minivan transmission, Accord V6 transmission 2002-2004, Toyota V6 issues etc., but generally, this is the case). With VW? Not so much. The 2.5 cylinder is bad on fuel, but reliable. The 2.slow is neither efficient nor good. The 2.0T is now reliable, but don’t buy one from before 2009. The 6-speed auto was fine, but the DSG had issues (may still), etc. etc. etc. When people want to buy some car with some engine and some transmission they don’t want to look that deep, and although VW has improved, it hasn’t necessarily been consistent across the whole lineup.

      Then there is the issue of optics. People hear stories about their friend’s experience with a 2001 Jetta and get afraid, and that sticks with them. Inherently, it takes a long time to build up a reputation of consistent reliability (and not long to destroy it), and this is what VW still struggles with. It needs to be reliable for another decade before it can truly gather speed in North America, given it’s history and competition.

      • 0 avatar
        Lorenzo

        After three years of increasing sales, the reliability factor should be trending toward the experience with very recent models. VW dealers never had a good reputation, so I can imagine how disgruntled dealers could have curdled the experience for recent buyers even more than they did for buyers of a decade ago.

        I suspect all VW’s problems are from the top down. They may not have realized that VW’s reputation in Europe as a somewhat upscale brand isn’t their image in America. A limited lineup and higher prices may work in Europe, but to chase volume here, they’ll have to offer a full, America-specific lineup that’s price-competitive. I don’t think Wolfsburg wants to hear that.

        • 0 avatar
          hreardon

          For lack of a better stereotype – it’s the same typical German arrogance that has gotten Mercedes and VW into trouble so many times in the past.

          The executives in Wolfsburg are furious that they cannot charge what they need to charge for their product in the US. While recently they’ve shown acceptance of the need to right-size and right-price their vehicles, VW corporate seems to be doing so in a fashion that looks more like *punishment* than it does working to build a competitive, great product. “Here, Americans, you want your cheap Jetta? Fine – you got it. Won’t pay the premium for our superior Passat? Fine – here’s your own econobox. Don’t call us to complain.”

          In truth, I think that the last ten years has found Volkswagen of America and Volkswagen Corporate slowly but surely getting onto the same page. Right now I think they’re caught in a bad bit of timing where new product isn’t ready, new localized factories and parts suppliers aren’t fully up to speed yet, the company has a lot of competing interests globally, and product planning hasn’t fully caught up to the realities of the US market – namely that VW doesn’t command the same level of respect or dominance as they do in Europe.

          For their sake, the upcoming Tiguan, Jetta and Passat replacements sure better knock peoples’ socks off. The move to localized manufacturing of the Golf+GTI in Mexico sure better bring better pricing and/or content, and the executives in Wolfsburg really need to listen to their people in the Americas about what sells cars here.

          Wait – it sounds like 2001 all over again….no?

      • 0 avatar
        vvk

        > The 2.5 cylinder is bad on fuel, but reliable.

        This is simply not true. Many Passat owners report 36 mpg.

        I have been consistently getting 36 mpg highway, high-20s in town. 2012 Passat S.

        • 0 avatar
          30-mile fetch

          True, the 5 cylinder really isn’t that far behind on efficiency, but we are living in an age where people will spend nearly $1000 to get an edition of the Ford Focus that ekes out another 1 mpg or so combined. Some people shop numbers, regardless of their real impact to the pocket book. It would drive me nuts if it were my job to sell products to these folks.

        • 0 avatar

          I’m largely talking about it’s implementation in the Golf/Rabbit. Admittedly, VW has improved its efficiency significantly in the last few years, but when my mother was comparing an ’08 Civic to an ’08 Rabbit she had to go for the Civic based almost entirely on the fuel economy variances between the two. This, despite the fact that she preferred almost everything else (except the equipment level) about the Rabbit.

          Personally, I think the 2.5 is one of the better engines VW has done in the last decade. I like the sound, I like the power, I like the simplicity, and I like the fact that it seems to be very reliable compared not just to other VW engines, but to the Japanese products as well. I don’t even particularly care about the (now slight) fuel penalty one might face with the 2.5.

          But for someone like my mother, the fuel economy differences were enough to make the decision for her. Here’s the kicker: she could have had more power and more efficiency in the same package with a GTI (which she also liked), but I couldn’t recommend it because of both the engine and transmission issues at the time (she needed an auto). And there’s the problem with recent VWs.

    • 0 avatar
      lon888

      “…biggest threat Volkswagen faced was that the Japanese would take their reliability and build upon it with interesting designs”.

      Actually, that has happened, but not by the Japanese but rather the Koreans. Think KIA Optima and other new KIA designs.

  • avatar
    highdesertcat

    Well, the VW fanclub of America would have us all believe that VWs and specifically Diesel VWs are the best thing since sliced bread.

    I beg to differ. VW has an impressive PR, Marketing and Advertising effort going on to sell VW products in the US but the demand for VW products is not all that high in the US, in spite of the fact that VW is trying to win over people with innovative sign&drive leasing.

    To qualify, all you have to do is show up at a VW dealer, and have a pulse.

    Maybe reality has set in and VW realizes now that their share of the US market is almost saturated.

    There’s always China.

    • 0 avatar
      Carrera

      Well, I think their product is ok, but their dealers are terrible. You basically have to find a VW guru to take it in even when the car is under warranty. Who wants to do that? The TDIs are a competitive vehicles but that’s until Mazda comes up with their own diesel. If another Japanese company brings a diesel ( I don’t think so though) VW’s goose is cooked. Their reliability is up compared to a few years back, probably not as high as the Japanese, but they really need to fix their dealer network. For my next vehicle, I am really thinking that a Tdi Passat would fit the bill, but that’s because there are not too many choices out there. I am also petrified of their dealer service department and in the end I will probably just end up buying a 6 speed Accord Sport.

      • 0 avatar
        highdesertcat

        Carrera, they might be OK for that specific clientèle who prefer a small diesel in that class of vehicle as long as they don’t keep them beyond the factory warranty period, like as in 1) Lease one OR 2) buy them and trade them before the factory warranty runs out. VW is pushing leases as well. Maybe exactly for that reason.

        I had resolved to do exactly that ( option #2) starting with our 2008 Japan-built Highlander Limited, but then immediately reneged when we bought a 2012 Grand Cherokee when I decided to keep the Highlander because it has been a problem-free vehicle.

        Now my 16-year-old grand daughter uses it for her daily driver. I’m very glad I kept it because the Highlanders made in the USA have issues, as experienced first-hand by three sisters of my wife, each with a different model-year Highlander (2009, 2010 and 2011).

        As far as VW is concerned though, I bought a 1982 Quantum aka Passat and I don’t care to repeat that experience again.

        Not only was the dealer totally inept at anything beyond the oil and filter change, they often would leave the Oxygen sensor disconnected after servicing, and on more that one occasion had disconnected the speedo-cable from the box on the firewall and forgot to hook it up again.

        I don’t think they knew where the service-interval reset button was because my wife was constantly getting a “Service Engine” light.

        I really enjoyed the VW aircooled engines, and they were easy to work on. But at some point in time VW lost their following in the States because their products were pretty bad, and consistently bad, over a long period of time. Maybe the dealers. Maybe the product itself.

        So now, there’s new crop of believers in VW, and VW is catering to them to part them from their money. It remains to be seen if VWs of today are any better than the VWs of yesteryear.

        If a VW is what an individual wants, I say go for it. But unless they have enjoyed a consistent and long-term favorable previous ownership experience with VW, they’ll be stepping up to Baby Benzes and BMWs sooner rather than later.

        It appears that fewer people in the US are taking VWs bait. That’s why the sales projection was revised.

  • avatar
    Kyree S. Williams

    Does this mean that I can get a Passat TDI for cheap? Because I totally would…

  • avatar
    ant

    just checking in to say that I think the car in the picture is really nice looking.

    No funky creases down the side, no weird bulging plastic light lenses, no chrome strip across the back, no goofy ginormous grill in front. The rims look really nice. The whole thing is tastefully done.

    In addition, there are really not that many 2door hatch backs to choose from these days. Fiat 500, VW bug, VW gulf…… and what else?

    I guess the two scions and the crz, but those are liftbacks in my mind…. And then there is the volester thingy, but that is a 3 door I think…..

    Anyways, I think that VW is turning people off with parts that fail too soon, and cost too much to replace. The one guy I know with a VW has a TDI golf, and it has had quite a number of part failures, and high repair costs. He does like the car though….. It drives nice, and gets good fuel mileage.

    • 0 avatar
      hreardon

      In many ways Volkswagen has an ailment similar to Land Rover: Rovers are notorious for breakdowns – everyone on the planet, even those who live the seabed, know this. Yet ironically, Rover also has some of the best customer retention in the business. Why?

      People love, love, LOVE their Rovers.

      This used to be the case with VWs: people kept coming back to buy them after being bitten in the arse with repair after repair because they just loved them so much. It was the intangible, subjective stuff that brought them back.

      Now that VW has shifted into being an econobox manufacturer for the US market (sans the Golf/GTI/CC, Touareg), that love is disappearing. As a result, put a Passat next to a new Mazda 6, Ford Fusion or new Honda Accord and which will you take? Personally, I’d take any of them BUT the Passat, and I am an unabashed Volkswagen supporter.

      VW may be better served by lowering their sales targets, increasing the love (and price), and the overall reliability and quality of their product and calling it a day in the North America market. At least then they would have an understandable position in the marketplace and stand apart from the competing econoboxes on the road.

      • 0 avatar
        tedward

        Why the dislike of the Passat? I’d agree somewhat if you were discussing the lower Jetta trim levels (not the GLI though), but the Passat has consistently done well or won comparisons since launch and is the only diesel option in class. It’s not for me but it’s a competitive, reasonably priced car with good consumer reports scores. Someone above mentioned the Korean alternatives, but IIRC they have lost every comparison of late to everything in class. They only showed well when they were launched because it was towards the end of everyone’s mid-size product cycle. To top it off the only two truly competitive alternatives (Altima, Accord) are going to saddle you with a CVT transmission if you want an automatic (I’m thoroughly unconvinced by these half-assed transmissions, recent articles here in support notwithstanding).

        I’m seeing a lot of people conflating old VW reliability scores with new ones, and reviews of the bottom-scraper Jetta trims to all other recent products (which have none of the base Jettas faults).

        • 0 avatar
          30-mile fetch

          My sit-and-poke test of the Passat on the dealership floor was positive overall. Interior quality was similar to the Golf next to it. Thoughtfully designed. Seemed like a decently crafted piece and fully competitive within the family sedan set.

          I haven’t driven it, but most reviews are largely positive. Dunno why it sells so poorly. I haven’t been very impressed by the Korean twins either, but they sell well.

  • avatar
    chicagoland

    The Phaeton should be priced against Avalon, or else send it back. Why pay Audi for a VW?

    Pay $60K and take it to a dealer with large “sign and drive” banners for service?

    • 0 avatar
      Manic

      You’d pay Audi for a Bentley, actually. Baruth had 3, Jim Yu of Hooniverse had one without problems and can’t find anything as smooth after selling it. It’s a invisible car for non-flashy people.

  • avatar
    hf_auto

    In other words… Now is a great time to lease a VW.

  • avatar
    gslippy

    Don’t worry; their arrogance will get them through.

  • avatar
    abhi

    Blah.. I have a GTI and it will probably be the last VW I ever own. Dealers are either good, incompetent, or swindlers and the list of things that have broken under and now out of warranty is making me worried about this car’s longevity.

    • 0 avatar
      Ubermensch

      If I may ask, What model year is your GTI?

    • 0 avatar
      parabellum2000

      I have a 2012 Golf TDI. I’ve had it in the shop 3 times in 7,000 miles. The first 2 times were for rattles, now the KESSEY (keyless start) doesn’t always start, and I have minor leak in the driver side door seal.

      The dealer has been nice, but everything takes a long time. It took 4 days to diagnose and fix a rattle in the passenger side door. They said they needed to wait for an engineer from VW to look at it. They ordered parts for the latest repair and I told them I would need a loaner car during the repair. They said no problem, but they wouldn’t have any available for 2 weeks!!! I’ve never had an issue getting a loaner car for warranty work at Mazda, Acura, or even Ford.

      I love the way the car drives and feels but I don’t believe VW assembled the car with as much care as they designed it. Unless something changes, I doubt I will keep the car past the warranty period.

  • avatar
    Jimal

    It really is a case of product, product, product. Volkswagen has a line up of niche cars right now, but those niches don’t add up to volume. Was anyone really looking for a “more butch” Beetle?

    If I were in charge I would get rid of their “pointless” cars (Eos, Beetle), add the Golf convertible (fill the niche while adding sales to an existing line) get the Crossblue into production (using a VW “weather pattern” name), jump into the mostly vacant compact truck market with the Amarok, and hit the reset button on the corporate design language. The current language is… staid.

  • avatar
    vcficus

    German automotive arrogance… annoying the business world since the late 1990′s!

    How’s that marriage of equals working out for Daimler… whoops, had to pay Cerebus $500 million at closing to take Chrysler off their hands!

    What’s really interesting is how Audi seems to be locked in on their brand management/lineup while VW seems lost every few years… Porsche can just keep selling 911s funded by Cayennes, so they’re OK.

    For being the ‘same’ company it’s quite different.

  • avatar
    Numbers_Matching

    I’ve had two VWs, and have been fairly pleased with them, but I could never understand their approach to the NA market. Whenever I talked about future product to the sales staff, their mantra was always the same ‘they (corporate) never send us what we want’. To me, this is the exact opposite approach taken by both the Japanese and Koreans. Could this pig-headedness be the result of being dominant (air cooled era) for so many years and using the ‘it worked before, why wouldn’t work again’ model?

  • avatar
    brettc

    I like VWs but I don’t get what they’re trying to do in North America.

    All that the German executives need to do is go to a computer and load hyundaiusa.com or kia.com and check out what their model range consists of. Then sell similar vehicles at competitive prices with both gas and diesel engine options in everything. And for good measure, sell the Amarok since the Koreans don’t even offer a pickup over here. Throw a 100000 mile warranty on them and then maybe it’ll start to slowly erase the “VWs are POSs” stigma.

    It’s worked for the Koreans so it could work for the Germans as well, assuming they don’t f*ck up the execution of it. Which they probably will, then they’ll blame Americans/Canadians for being too stupid to buy their cars.

  • avatar
    philadlj

    A 46,000-unit correction, eh? That’s all? Let’s look at how the segment VW doesn’t compete in did in 2012:

    1. Explorer: ~164,000
    2. Grand Cherokee: ~154,000
    3. Edge: ~127,000
    4. Highlander: ~121,000
    5. Sorento: ~119,000
    6. Pilot: ~119,000

    13. (BOF) 4Runner: ~48,000
    14. (BOF) Pathfinder: ~42,000

    20. Toaureg ~10,000

    (Source: Tim Cain’s GoodCarBadCar)

    All VW would’ve needed to fill that gap was a moderately-successful Passat-based mainstream CUV.

    So…where is it?


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