By on September 10, 2013

Screen Shot 2013-09-05 at 12.18.20 PM

It’s time to talk about Volkswagen. You know Volkswagen: they make the Jetta, which is possibly today’s most adept compact sedan at churning out lifelong Toyota customers.

I bring up Volkswagen because I wrote a column earlier this week about Volvo, and both of those brands share something in common. Is it that they’re the only car companies that start with “V”? No, not at all. You’re forgetting about Venturi, a sports car maker that somehow went bust despite being located in the global industrial manufacturing powerhouse of Monaco.

No, the thing Volvo and Volkswagen have in common is that both automakers saw a decline in sales last month compared to August 2012. That’s bad news if you’re Volkswagen or Volvo, because the entire rest of the auto industry was up. That’s right: every other brand saw an increase. Even Rolls-Royce had a banner month, eclipsing last August’s total by a whopping five vehicles.

Anyway: the reason I bring this up is that it would seem Volkswagen is in trouble. You see, we already know Volvo is going down. That article a few months ago that said they wouldn’t live to see 2015 proves their demise is imminent, no matter how many LEDs they cram on to the front of the next XC90. So Volvo was down, and we expect them to keep being down until they wither away, leaving people in the Pacific Northwest with nothing to drive. (Don’t worry: they will find a solution that involves hemp.)

But why was Volkswagen down?

Volkswagen, for those of you who don’t know, is the world’s most sales-obsessed corporation. I know this because I’ve read perhaps 4,000 articles about Volkswagen’s obsession with some pie-in-the-sky volume goal for 2018, and I’ve never read a single article that covers any concerns they might have about, oh I don’t know, profitability. In fact, I’ve read so many stories about Volkswagen’s volume goals that you’d think they were punching each article as a retail delivery.

Because of this, I’m going to assume they don’t care about profitability, only volume, which leads me to the point of this column: Volkswagen is desperately in need of a new lineup.

I discovered this on a recent visit to Volkswagen’s website, which I highly recommend visiting if you get excited about the Futura font. Listed there, on Volkswagen’s website, in Futura Light and Future Medium and Futura Bold, is a lineup that does not, under any circumstances, represent a full-line automaker in the United States.

To understand what I mean, let’s turn to SUVs, and let’s turn to Toyota. Toyota sells, at last count, seven different sport-utility vehicles, all of which compete in different segments. I have no idea how Toyota managed to do this. Really, they created micro-segments, skillfully convincing customers that the RAV4, the Highlander, and the Venza are very different cars, purchased by very different people, and you should buy this one because it has the most dealer markup!

Screen Shot 2013-09-05 at 12.19.59 PM

Meanwhile, Volkswagen sells two SUVs. You have the Tiguan, which starts at a reasonable price until you discover it comes standard with a stick shift. Throw some options on and the Tiguan can climb to nearly $40,000, a figure also defined as “roughly 1.5 times what anyone in this segment wants to pay for a car.”

There’s also the Touareg, which starts – starts – at $45,000. Mind you, this is supposed to be Volkswagen’s competitor in the high-volume midsize SUV segment. So how does it compete? Last year, Toyota sold 121,000 Highlanders. Ford sold 128,000 Edges. Chevrolet sold 219,000 Equinoxes. And Volkswagen sold 10,553 Touaregs. Ten thousand five hundred. The Porsche Cayenne, its own sister vehicle, outsold the Touareg by roughly 50 percent.

Things aren’t very different if you turn to VW’s car lineup. Yes, they still sell the Jetta, which competes with glitter for the top spot on the “annual spending by sorority girls” list. And they sell the Passat, which is slowly becoming an acceptable midsize sedan thanks to offers like: Zero percent interest for the rest of your life!

But aside from those two, we have the Golf, which very few people buy; the CC, which even fewer people buy; and the Eos, which – this is entirely true – now starts at $36,000 without any options.

If we go back to Toyota, Volkswagen is missing out in several segments. Scion may not be a force, but it sold 74,000 units last year. The full-size Toyota Avalon accounted for 30,000 sales. And the subcompact Yaris was 31,000. But Volkswagen’s biggest loss to Toyota comes in the world of hybrids. Last year’s Prius sales? 237,000. Last year’s Jetta Hybrid sales? 162. Not thousand. One hundred and sixty two. In fairness, the Jetta Hybrid may not have been on sale the whole year – but I wouldn’t know, because I’ve never actually seen one.

And so, I repeat my point: if Volkswagen plans to hit these crazy volume goals, it’s time to get a new lineup. A few more cars; a few more SUVs. A hybrid. And maybe something made from hemp. After all, someone has to cater to those Pacific Northwest buyers once Volvo leaves.

@DougDeMuro is the author of Plays With Cars and the operator of PlaysWithCars.com. He’s owned an E63 AMG wagon, road-tripped across the US in a Lotus without air conditioning, and posted a six-minute lap time on the Circuit de Monaco in a rented Ford Fiesta. One year after becoming Porsche Cars North America’s youngest manager, he quit to become a writer. His parents are very disappointed.

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167 Comments on “Volkswagen Needs a New Lineup to Reach Its Goals...”


  • avatar
    7402

    I have test driven the Tiguan and Jetta Sportwagen. I liked the Sportwagen, I really did, but I wanted it for the clutch pedal, and I couldn’t get the seats I wanted without the sunroof, and the sunroof lowered the ceiling so I don’t fit. I liked the Tiguan, but it seemed like a vehicle with an SUV shape should have AWD, but I couldn’t get the clutch pedal I wanted and have AWD at the same time.

    Despite the snide remark about entry level VWs coming with “stick shift,” said real-clutch-pedal manual transmission is what actually brings some buyers to vehicles like the Jetta, Subaru Forester, etc. And then they slam the door in our faces by preventing us from bundling that quite nice manual transmission with basic amenities.

    But I agree VW is headed down the same road as Volvo. Despite coming of automotive age driving and tinkering with air-cooled VWs, we drove Volvos through the child-rearing years. Volvo lost its mojo when they lost the square shape. Volvo’s decline began the day the first S80 left the factory, and the S60 burned the last bridges with former customers. VW’s decline can probably be dated to the “German Engineering” ad campaign which brought into sharp relief the things that weren’t German (really, what did they expect me to wonder?). I remember a late 1980s visit to a VW dealer and having a salesman tout the German engineering as we pondered the Hecho en Mexico sticker in the trunk.

    Now we drive Hondas and BMWs.

  • avatar
    dwford

    My manager is newly obsessed with buying Jettas and Passats from Enterprise for sale to our credit challenged customers. These base base models make me say “oh dear” every time I get in one. There really isn’t any quality difference or equipment difference between a base Jetta and a base Dodge Avenger. Head down to the rental lot to see what I mean.

    • 0 avatar
      28-Cars-Later

      I could see the reasoning (VW is cool! VW is quasi-European!) but sense would get the better of me as the used car manager. I’d pursue cheap Asian models for my credit challenged customers and tout the Japan-is-superior nonsense to them. A few of the really irresponsible folks might dig the Jetta over say a Corolla, but in rental spec it loses it cache. Some people seem to think Hyundais are the Second Coming, ask your manager about playing up that angle since they are so “cool” like VeeDubs.

  • avatar
    danio3834

    There was a period of time where I thought the CC and Passat were the same car. And I’m a car guy. Imagine how hard this must be to figure out for regular people.

    I’m sure they make reasonably fine cars (even though my own anecdotal experience tells me they’re not very great), but there are a couple things holding them back:

    1. They aren’t particularly special as compared to the competition,

    so

    2. They aren’t worth the price premium they generally ask for

    Anyway, like Volvo, they’re a car company I could live without. Toodle-oo VeeDub

  • avatar
    FractureCritical

    have you ever driven a VAG product and compared the option list to what you get from Kia or even Toyota? Base model Corollas come with more widgets than some base model Audis. There seems to be some belief that US consumers will pay through the nose for options (that on a VW likely have a dubious service life)

    People in the US pay for brand (which is sad) and they pay for interior space (which is kind of nonsensical since the materials cost difference is incidental and the labor cost difference is non-existant) and they pay for content, which could be had in the form of quality, performance (economy or power), and option widgets.

    People will cite cost/value, but I really don’t see that as a significant metric. If it were, then the Porsche SUV thingie wouldn’t outsell VW SUV thingie, and people would buy loaded camrys and Hyunda Genesis coupes instead of stripped Audi A4′s and BMW 328 coupes.

    VW can only trade on performance (their dominance of which is waning as Hybrids start to outstrip the TDI and other makers offer hot hatch competitors) and possibly on brand ( but really only to the faithful). They haven’t restored themselves to the point of being able to trade on quality, and they are too confiscatroy with options to trade on content. That pretty much leaves them with interior space, and there are precious few people who will spring for a big back seat over a wagon. Let’s not lie to ourselves – things like the Venza are really just wagons.

    • 0 avatar
      danio3834

      “People will cite cost/value, but I really don’t see that as a significant metric. If it were, then the Porsche SUV thingie wouldn’t outsell VW SUV thingie, and people would buy loaded camrys and Hyunda Genesis coupes instead of stripped Audi A4′s and BMW 328 coupes.”

      Brand cache, whether it be due to perceived quality or real, does factor into a cost/value determination. However unquantifiable it may be.

    • 0 avatar
      dtremit

      Luxury buyers will pay through the nose for widgets, but mid-range buyers won’t.

      VW’s problem, I think, is that they don’t really understand any buyers but luxury buyers.

      (I think there’s going to come a day, though, where even luxury buyers get sick of paying a la carte for things that come standard on cars half the price. I can’t be the only one who chafes at BMW charging for metallic paint and keyless go when they’ve been standard on a damn Altima for almost ten years.)

  • avatar
    hreardon

    I’ve mentioned this before in other threads: Volkswagen made several key strategic mistakes when it comes to North America. Some of these will be remedied in time with new factories with localized production, but the biggest mistakes were this:

    1. De-contenting their volume product. People bought all of those MK IV Jettas and B5 Passats because they were *special* and had a certain feel that most other product lacked. Granted, they fell apart before the 2 year / 24,000 mile warranty expired (who here remembers that warranty coverage?), but people WANTED a Jetta or a Passat. Now? Not so much.

    2. Volkswagen mis-read the direction of the market. My guess is that the German overlords did their typical German overlord thing and said, “fine America, you want cheaper cars? you’ll GET your cheaper cars, dammit!” Whoops – this at the same time that Honda, Ford, Mazda and Hyundai were kicking up their content and quality.

    3. Point #2 kind of goes back to my previous comment about localized production and profitability desires. My take is that a large reason for the move toward de-contenting was to hit financial targets, as well as to improve reliability by simplifying the vehicles. Again – VW misjudged how quickly the rest of the market would evolve to match them.

    4. Straddling niches. For reasons that I cannot understand, apart from a lack of investment dollars allocated to the US, VW thinks that their models can span niches. Take the Tiguan, ranging from the low $20s to almost $40k. In no sane world does anyone purchase a $38,000 Tiguan. That’s Audi Q5, BMW X3 and X1 territory. I understand why they do this: they are at a competitive pricing disadvantage and as a result we get compromises.

    5. Long platform lives. The CC, a decent car in its own right, is ancient. Our friend Jack Baruth recently pointed out just how ancient the car *feels*. You cannot sell a lifestyle/design product and not significantly update it on a regular, short cycle.

    Volkswagen still needs to determine what it wants its US brand to look like in coming years. Are they going to cede the $25k and up market to Audi to cover with cars like the (speculated for US consumption – eventually) A1, Q3 and A3, or are they going to recognize that there is room for both, but that the volume brand cannot be overly cheapened in this hyper competitive market?

    The move toward more localized production will help a LOT, but the benefits of that strategy are a good 18 months away. Significant redesigns of the Passat and Jetta should be fastracked, along with crossovers galore. Christ, Audi sees the crossover market as becoming so significant that they’re building a factory SPECIFICALLY FOR THE Q5 ALONE!

    Volkswagen management in many ways is like rooting for the Cleveland Browns (or any Cleveland team for that matter): every model year is a ‘rebuilding year’ – just you wait until the new hotness arrives. Rinse, wash, repeat that phrase every year for the rest of your life.

  • avatar
    mr.cranky

    Three points I’d like to elaborate on:

    1. Oh how nice! A quaint dig at those who drive Volvos, complete with stereotypes of folks that drive them. Not needed in this article.

    2. Comparing Prius sales to that of the Jetta Hybrid ignores one teensy-tiny detail: Prius is a full hybrid while Jetta Hybrid is what we call a “mild hybrid”. Until VW comes out with something that is even remotely in the same class as the Prius, you can’t possibly compare sales.

    3. Volkswagen is throwing away quality in favor of quantity. That’s the only part that I agree with. They don’t realize that you don’t have to mercilessly de-content your cars in order to sell them to Americans.

  • avatar
    jz78817

    VW’s problem is that their only “loyal” customer base is twerps who think owning a TDI makes them “tech savvy.”

    as if they’re the first people to discover this “diesel” thing.

    • 0 avatar
      bjchase55

      And there is the other crowd…the GTI fan boys. People ask me why I bought a VW. I say I didn’t. I bought a GTI. =)

      And that may be part of VW’s “problem”. I think people who buy the GTI or a TDI aren’t really VW fans but more of GTI or TDI fans.

      • 0 avatar
        mnm4ever

        +1!! I am going to use that line.

        There is no other VW I would even consider except the GTI, and every time someone asks me about buying any other VW product I steer them to some other brand. IMO the GTI is the only thing they get right.

        No wait, the other thing is cheap leases. Whenever they have the “sign and drive” specials (and only if you can stomach driving the base model) the leases tend to be really cheap too. But lately Honda has been beating them there too.

      • 0 avatar
        CoreyDL

        Gotta get some aviators and a big Apple sticker for the back of your GTI. And some skinny jeans.

        I see so many GTI douches!

        • 0 avatar
          bball40dtw

          I love stereotypes so much. I would be offended if I wasn’t laughing. I don’t resemble that remark though.

        • 0 avatar
          mnm4ever

          OK @corey now that was cold. I don’t even own a Mac. Aviators… well, ok yea I do have those, but the smaller lens type so it doesn’t even count. :)

          And unfortunately I have to agree, almost every VW has a Mac sticker on it, they seem to attract the same kind of buyer. And most GTI drivers are douches. And the stickers and mods they like to put on their cars are starting to make ricers look classy.

          • 0 avatar
            CoreyDL

            At least you agree! I didn’t figure you were one of “those” owners, as I know you’re a bit older [than that sort].

        • 0 avatar
          bjchase55

          I have yet to meet any douche GTI driver. Than again I don’t see many of them. Although I guess I can be a douche to the person who just cut me off while talking on a cell phone. =)

      • 0 avatar
        bumpy ii

        The TDI would be awesome if it came in a Corolla or CR-V.

    • 0 avatar
      bball40dtw

      As a former GTI owner, VW had nothing for me when I wanted a larger car/CUV. As much as my wife likes the Tiguan, she could configure a Edge or Explorer with leather and Nav for cheaper than a similar Tiguan.

  • avatar
    JaySeis

    VW finally got my attention with a lineup of vehicles that has got to be hands down the ugliest designs on the planet. That’s German engineering for you. When I see a VW commercial I think “Cold War Russian tank factory built that”. Maybe the reunification of Germany is finally coming home to roost.

  • avatar
    Sam P

    “So Volvo was down, and we expect them to keep being down until they wither away, leaving people in the Pacific Northwest with nothing to drive. ”

    The dream of the 90′s may be alive in Portland, but most people who bought Volvos new in the 1990s in the PNW have long since moved on to the Prius, Outback, and Forester.

  • avatar
    challenger2012

    VW buyers have always been impervious to logic or reason, a loyal crowd, yes, but a particularly bright crowd, no. VW’s have always sold for more money, yet offered not better quality or engineering advantage than the Japanese could build and the Americans do, now. Yet VW sold to people the idea of German engineering, which we all know is worth a premium even though VW cars have always had quality and durability issues.

    I was taking a class at NOV, where an instructor was telling me how his VW got 50 plus miles to the gallon on diesel, then mentioned that at 60K, the turbo went out at a cost of $2,400. A co-worker’s wife’s VW diesel turbo went out around in the year 2000, at the cost of $1,800. Factor in the ultra high prices of VW parts, I can’t see why people buy them, but I own a Dodge Hemi Challenger, so what does that say about me?

  • avatar
    bball40dtw

    It gets worse for VW in the three row crossover competition. They sell zero in the US while Ford may sell 200,000 Explorers this year at almost $35K a piece. Other companies sell quite a few three row CUVs or SUVs in the US as well. VW is years away from actually selling one.

  • avatar
    thegamper

    I tend to agree with the premise of this article. VW’s pricing makes no sense for some of their models. They ask for a premium without offering a premium product. Sort of like an Apple product, the brand name is the primary sales driver, not the content, capability or value offered by said product. They either need to offer more for the premium price or bring the price down to more closely match competitors. Instead, they are keeping prices higher and decontenting cars. There is only one sucker born every minute and there are plenty of other scams out there competing for their hearts and minds. Brand cache (for those who believe the advertising) and the desire for that “German Engineering” will only net so many lemmings. Eventually VW will have to offer substance in order to compete long term in the US.

    They might want to end the practice of selling all new cars with one non-functioning tail light as standard equipment. Am I right??? How do they manage that??

    • 0 avatar
      hreardon

      Negative, Ghostrider:

      “like an Apple product, the brand name is the primary sales driver, not the content”.

      This is the aspect about Apple’s success that its naysayers never understood: the brand has been resurrected precisely BECAUSE of the quality and useability of its products.

      Volkswagen is the opposite: the BRAND thrives IN SPITE of its lackluster portfolio and reputation for poor service/reliability. If anything, it’s a testament to VW’s marketing machine. ;-)

      • 0 avatar
        28-Cars-Later

        Disagree on quality, there was a time where Apple built a superior computer, and that time is past as Macs are now PCs with a Darwin BSD derived O/S platform (heck if you must have OSX, it can be installed on non-Mac hardware if your savvy). I can’t comment on the other junk they sell simply because I’m not knowledgeable enough about it to make an argument.

      • 0 avatar
        thegamper

        I would agree that Apple does not have the quality issues that VW has, but I will stand behind my previous statement that Apple sales and popularity is driven by the brand name rather than the capability of their products. Apple’s greatest creation has been a shiny package, smoke, mirrors and glitter to hide the fact that you are paying a premium for a product that is often times not the most competent on the market (sometimes not even close). Why does every iphone/ipad protector have a hole in the middle so the Apple can show through the back? Because most people who buy them didnt do so for the superior quality, capability, etc. They bought it because it had an apple on the back and if it isnt showing, it might as well be a paperweight.

        • 0 avatar
          LeeK

          The Apple logo is uncovered by the protectors because that is where the wireless antenna is placed on an iPhone, iPod, and iPad. It is about not blocking reception, not preserving the logo. Now you could argue that Apple didn’t need to place the wireless antenna there in the first place, but that is a different discussion.

  • avatar
    CelticPete

    I think VWs expanded lineup is coming. It takes some time to transition to their new architecture.

    The current cars they have are still competitive though. They do drive slightly better then their competition for the most part. The fact that they lag in models to cover the US market does not doom them.

    That is the luxury of being part of the most valuable and second largest car company in the world. Placing them in with companies like Volvo is just silly. VAG is a powerhouse.

  • avatar
    CoreyDL

    You hush about Venturi! The Atlantique is my favorite supercar from the 90s!

    It’s beautiful.

    http://www.goodbuycarsourcing.co.uk/gallery-content/images/Venturi%20Atlantique%20300%20Twin%20Turbo.jpg

  • avatar
    SCE to AUX

    Although I’m not one who seeks ways to be offended, I find the term ‘German engineering’ to be at least nationalistic, at worst racist, but certainly arrogant. For me, it harkens back to the Bad Old Days when such slogans were used to separate people groups into ‘live’ or ‘die’ categories.

    But somehow the term is acceptable for print and TV. Frankly, I’d like to hear VW explain what it means.

    Either way, I’ve owned my first and last VW (02 Passat); in my experience, its German engineering wasn’t as good as Japanese or Korean engineering.

    If German engineering is really all that great, they (you know, all those German car companies) could start offering 10/100 warranties on their products.

    • 0 avatar
      mnm4ever

      I think you are reaching there on the term “German Engineering” being offensive. I am not young and I have no idea which bad old days you are referring to that used such slogans. Its a term that was widely used in the car industry as far as I can remember… Porsche, BMW, Mercedes… if anything VW has glommed onto it. Its a German company, it doesn’t need any more explanation than that, and its used for marketing, it doesn’t even mean its truly better, it just is.

      As for the 02 Passat, that was easily the worst generation of VW products ever, so you got a pretty bad first experience. But I will agree that it hasn’t gotten THAT much better since then so save your $30k or so. :) But in VW’s defense, Korean engineering in 2002 wasn’t all that great either.

      • 0 avatar
        glwillia

        In my experience, any company that calls attention to its “German heritage” or “German engineering” sells a mediocre product that rides on the coattails of much greater ones that established Germany’s reputation. For example, VW -> BMW, Mercedes-Benz, Porsche and St. Pauli Girl -> Aventinus, Koestritzer, Ayinger, etc.

        That being said, I still want a manual Jetta TDI SportWagen, even if it is hergestellt in Mexiko.

    • 0 avatar
      Fordson

      So the term “German Engineering” reminds you of the Nazi Party and the Holocaust, to the point that you don’t think it should be acceptable for print and TV ads?

      I understand the well-deserved claims of high-quality engineering of Lexus, Infiniti and Nissan GT-Rs and the like, but they don’t remind me of the Rape of Nanking or Mitsubishi Zeros strafing Manchurian villagers.

    • 0 avatar
      28-Cars-Later

      I agree with your point, but from what I’ve read those 10/100 warranties come with a few asterisks.

    • 0 avatar
      Kenmore

      “at least nationalistic, at worst racist, but certainly arrogant”

      Absolutely, and we boomers all secretly dig that or they wouldn’t play it up.

      But the youngsters that replace us won’t have grown up building models of Me262s or Tiger IIs, won’t have ogled killer-stark design details of Me109s in museums, won’t have had a childhood full of WWII movies, TV shows and comix, won’t know what brennstoff means or who von Braun was and how important “our Germans” were… they won’t care about the claim.

      So, you’re right and it soon won’t matter.

    • 0 avatar
      jz78817

      German Engineering: “Why use one moving part when six will do?”

    • 0 avatar
      azmtbkr81

      Oh come on, that’s ridiculous. Germans were know for engineering prowess long before Hitler’s arrival and continued that tradition after the war. German engineering isn’t necessarily superior (especially not in VW’s case) but to me emphasizes purposeful, industrial design with an inherent solidity. VW and others market to consumers who appreciate those qualities, it is really no more complicated that that.

      Engineering is as much a part of the cultural identity of Germany as wine is to France so to tie that in to the Third Reich is an insult to modern Germans who have worked hard to move past that terrible time in history.

      • 0 avatar
        Kenmore

        You’re right, too. England was worried about German goods at least as early as their Merchandise Marks Act of 1887 that required “Made in Germany” be stamped on any German product sold in England.

        They thought it would flag cheap, shoddy goods and it kinda backfired on them.

        That’s what’s fun with these Big Historical Topics… everybody gets to be a little right.

        • 0 avatar
          danio3834

          Interesting. When was the last time you saw the words “Made in England” imprinted on something?

          • 0 avatar
            ajla

            Tea.

          • 0 avatar
            CoreyDL

            Tea bags! Twining’s. Good stuff, not expensive.

          • 0 avatar
            Kenmore

            Aside from Ilford film & paper back in the ’80s, never.

            But I never had a Limey bike or car. Maybe they had that.

          • 0 avatar
            Mark_MB750M

            we’ve got a couple stoneware and china mugs/cups in the cupboard that were made in England. That’s the only recently purchased items
            I can think of. maybe some of the wife’s clothes, too….

          • 0 avatar

            Revolution tea is like ten times better.

          • 0 avatar
            DeadWeight

            Doc Martens.

            But that’s only if you spring extra $$$ for the specific “Made In England” line, now, which was once the only kind.

            The new standard Docs are made in China, as are some Wolverine AND EVEN RED WING BOOTS!!!

            What’s the world coming to?

            Wait, what are we discussing again?

            Oh yeah, decontented yet still overpriced VeeDubs with that timeless lack of reliability, durability & piss poor customer service, to boot.

            Alex, I’ll take the Honda, Mazda, Toyota, FORD or CHEVY whatever over any VW, and save money, aggravation, and much warranty or non-warranty repair downtime, thank you.

            Carry on.

          • 0 avatar
            danio3834

            I have an old bench vice that was cast in England. It has to be at least 50 years old. Other than that, I guess that Vanquish I drove a while back was hatched there.

    • 0 avatar
      Numbers_Matching

      ‘German engineering’
      It is still a reputation to be admired around the world. Travel to almost any part of the developed or developing world and observe which companies are responsible for supporting the infrastucture, manufacturing, research, mega building projects etc, and you will find that many of those are large German engineering firms or their locally established subsidiary.
      I don’t know why VW started pushing it so much though.

    • 0 avatar

      German Army and planning were superb, almost perfect and German weapons – superior to everyone else’e. But the problem was the same as with German cars – they were too expensive and unreliable. Operation Barbarossa was perfectly planned (except of one month delay which proved to be vital) and they had overwhelming superioority over Red Army, Blitskrieg worked. But German Engineering could not handle harsh Euro-Asian realities because as I said was too complicated, did not work on low quality fuel, unreliable and difficult and expensive to fix.

    • 0 avatar
      JaySeis

      Like “Imorted from Detroit”. I laugh every time I here that.

  • avatar
    brettc

    VW does need to revamp their lineup badly. And lower their prices as well. It can’t seriously cost $24000 to build a Jetta SE in Mexico…. Supposedly the Polo is coming in 2015 to North America. Then the new Golf (and a Golf GTD) and the new Jetta wagon. And supposedly a new Tiguan with a TDI. And supposedly a new Jetta sedan. And maybe a 3-row SUV. But as with anything VW, I’ll believe it when I see them for sale on a lot. I like my Jetta Sportwagen but if another manufacturer sold a diesel wagon I might have bought it from them.

    There are a lot of better alternatives if people are looking at VWs and aren’t into fixing their own cars. VWs still aren’t cars for “drive it and forget it” type owners. They need their routine maintenance done on schedule with the correct parts and correct fluids, otherwise things can get expensive.

    VW was offering 0.9% for 60 months on 2014 Jettas in August. But for September their incentives are all aimed at clearing out 2012 and 2013 inventory. The only 2014 model incentive for September is $1250 dealer cash on Jetta GLI only. So September might also have some comical/sad numbers from VW.

  • avatar
    TMA1

    That new Phaeton can’t get here quickly enough. That’s what is going to save Volkswagen.

    Here in reality though, I would love to have the opportunity to acquire a Scirocco.

  • avatar
    cpthaddock

    While I understand that VW has had tremendous success with their Audi’s by pricing them to match other German luxo vehicles and adopting a similar dealer attitude, based on their product pricing I have to wonder if they are hoping for too much that this will work for VW as well.

    Doug’s use of Toyota’s for comparison is also relevant from the perspective that Toyota has historically charged a brand premium for their vehicles. With reports and much discussion here of Camry incentives and price cuts, I doubt anyone is in a position to charge brand premiums for mainstream cars at the moment. The quality of current competition may have done away with that possibility.

  • avatar
    genuineleather

    VW shares another thing with Volvo: a clientele that’s traditionally been coastal professionals who want something better than a Camry but worse than a BMW. Oh, and certainly nothing domestic *shudder*.

    Problem is, Mercedes and BMW became much cheaper than they’ve historically been at the same time VW went the full Piech, turning out premium offerings nobody asked for. Thanks to abominable resale and VW’s rep for substandard reliability, they’re no cheaper to lease and not much cheaper to buy than their “full-luxury” competition.

    Like Volvo, they’ve priced themselves out of their natural market. Worse still, the cheapo new products rounding out the bottom of the brand pyramid are eroding the superior badge image that allowed VW to charge a premium in the first place. Good luck selling even 10k Touaregs a year when the people driving them start noticing the same badge on fast food employees’ stripper Jettas.

    Fortunately for VW, they’re the only game in town for sub-$30k diesels; without that euro-snob appealing distinction, they’d be suffering more than they already are.

  • avatar
    carguy

    There certainly are some gaps in the VW product armor:

    Sub-compact: None until the Polo arrives
    Compact hatch: Golf is in a holding pattern until the 2015 model arrives
    Compact sedan: The refreshed Jetta is still competitive
    Mid-size sedan: The Passat is a competitive product but faces some very stiff competition from both domestic (Ford Fusion) and import (too many to name)
    Full size sedan: None until the Phaeton arrives but will most likely be too expensive to compete with Buick, Toyota, Chevy etc
    Compact CUV: The Tiguan is hopelessly out of date and overpriced.
    Mid-size CUV: None
    Full size-CUV: None
    Mid-size SUV: Touareg is a bargain compared to its Porsche and Audi siblings but out of the $30-40K mainstream price range where the volume is.

    • 0 avatar
      philadlj

      All of VW’s “premium” offerings (Touareg/Tiguan/Eos/Phaeton) have been unqualified disasters, and I think it’s mostly to do with the badge. People with the money to buy those will surely go next door to Audi, Benz, or BMW, to spend a little more.

      Those models have NOTHING to do with the direction the new Passat and Jetta portend, yet VW’s simply stalled with the product onslaught that was needed to get anywhere near that 800K NA figure. Their sales numbers only add up to peanuts. I’d dump the lot and focus on mainstream value models that will actually SELL.

      The CUV gap is the biggest and most inexplicable, but it’s just as ridiculous for a company known throughout the world for its small efficient cars to not have a sub-Golf offering.

      You also make a good point about a large sedan: the Passat is large enough to compete with Camry/Accord, but not the Impala/LaCrosse/Avalon. And again, the Phaeton will cost too much.

  • avatar
    dmw

    Before VW decided it wanted to be #1 in the galaxy, this issue of line up was not an issue. In fact, the lack of traditional American segment offerings was part of the nichy cool they wanted. Now that volume is required in the USA, VW has expressed a clear idea of how to get into the game. They built two big, cheap cars. They did OK, but not stellar. They next stage is to build jacked up versions on the same platform. Amortize and save. Also, you can sell a CUV version of a sedan platform for more money than the sedan, because black plastic cladding is like cat-nip to Americans. But they better hurry up, because the shine of the Jetta and B7 Passat, as it was, is wearing off.

    My family is a case in point. The last VW we bought, as a family car, is discontinued. There is no replacement for the Passat Wagon, which my wife adores. The Toureg would be nice, but costs way too much. The Tiguan is a ridiculous little thing. The Sportwagen is too small. So where do we end up when we want to spend 30-ish on a family car? Do we end up back at the Toyota dealer, which my wife couldnt leave fast enough after seeing the crummy RAV4 interior? Or one of Ford’s 15 gradations of CUV? Wherever it is, it won’t be back at VW, unless and until then can do a wagon (which will be jacked up and cladded, perforce)that has “utility” but is price-competitive, or, alternatively, has enough style and UX to carry off a premium. I have my doubts that they can pull it off.

    • 0 avatar
      bball40dtw

      I completely agree. The other problem is that they need some competitive CUVs because the world, not just Americans, seems to be buying CUVs. VW has figured that out with Audi.

      The competition has mass market CUVs everywhere. From things like the EcoSport and Duster to the Flex and Highlander. VW hasproducts like the Taigun and possibly a midsized crossover coming out in 2016, but how many Dusters and Ecosports will be sold by them?

    • 0 avatar
      Mark_MB750M

      Even though Volvo is coming in for some abuse here, have you looked at an XC70? It compares well to our older V70 in that jacking it up to SUV height didn’t really impact the usability. The leftover height is about the same and the cargo area is equal. Smooth, quiet, can be had for 32-35K depending on options for a 3.2 FWD

  • avatar
    walker42

    Total disaster at VW. Not just in underestimating what it would take in competitiveness for the Passat to be successful but also in strategy.

    Strategy review

    To make it simple let’s look at mid-sedan. Here is how the cars are positioned…

    Slightly above market – Passat
    Heart of the market – Camry, Accord, Altima, Sonata (and Fusion)
    Slightly below market – Jetta

    Here are the transaction prices and MSRPs, in rank order to support above, all from Edmunds comp equipped…

    Passat $23,217 (MSRP $25,840) – Even with steep, unexpected discounts, sales are at 50% lower than plan. Fleet has been added to avoid either the largest discounts in the segment or even lower volume. The car is barely two years old.

    Altima $22,841 (MSRP $24,870) – People make the mistake sometimes of just looking at the incentives, $2,000 a car or whatever. When you consider that Altima’s MSRP is higher than Accord, Camry and Sonata the same discounting nets a higher transaction price. Sales volume ahead of plan and includes some fleet.

    Sonata $22,456 (MSRP $24,340 – Transaction price almost as high as Altima and about $800 higher than Camry. Fantastic for a four year old car. Come any closer to T and they will cut their price, wipe out your gain and leave you with $600-800 less profit per car. Sales volume ahead of plan.

    Camry $21,647 (MSRP $23,490) – Talk about aggressive. High incentives, high fleet and the car is barely in its second year.

    Accord $21,530 (MSRP $23,270) – A screaming deal if you ask me. #1 selling car in USA. No fleet. Boat loads of profit.

    The profits on Altima, Sonata and Camry are also huge, easily the highest of any model in their respective lineups. The Passat? It’s anyone guess but mine is that VW is losing money on every one they sell. There’s no making that up in volume that’s why you are seeing the production cuts.

    Strategy next time

    VW should aim a Passat at the heart of the market. Make it the best you can, give it a standout personality in line with the VW brand, price it with the rest and you will sell a shitload. (Altima level is fine, doesn’t have to be as low as Camry).

    Today’s Passat is just a stretched Jetta, a C-class car. They need more platform and a lower price next time.

    Yes they will have to rethink the Jetta a bit, so the new Passat isn’t right on top of it. Why not make it a tad smaller and sportier? The target market will like it even more.

    What’s locked in for the upcoming CUV?

    That’s the $64,000 question. If they used the Passat platform and pricing/competitiveness strategy for the CUV, I think it too is going to fail. Things must be pretty locked up by now if it’s coming anytime soon.

    When will heads roll?

    When you see VW blaming the dealers (they told us to make it big, cheap and dumb!), the dealers blaming VW (recent emergency meeting) and the execs saying about 2018 “it doesn’t matter when we get there, what matters is that we are headed in the right direction”… you know things must be bad.

    Lots of finger pointing and excuses, it always starts that way.

    If they think things are bad now wait until the competitors add their own diesels.

    • 0 avatar
      bball40dtw

      I can see the CUV plan failing too.

      By the time VW gets a Tiguan replacement and a midsized CUV out, other brands will still be a step ahead. If they bring the Passat based CUV out, how will it compete with the next gen CUVs based on better platforms?

      • 0 avatar
        walker42

        Imagine what it must be like at VW right now if the CUV plan is in place and the one above Tiguan is going to use the current Passat strategy. On the one hand you have all this pressure to bring it out ASAP. On the other you know in your heart it will fail too.

        • 0 avatar
          bball40dtw

          It will be an even worse debacle than the Passat. It’s tough enough to compete with all the midsized five passenger CUVs. Three row crossovers like the Explorer, Durango, Highlander, and Santa Fe will probably priced the the same range as a five passenger Passat CUV. They’ll want Grand Cherokee money for an inferior product.

    • 0 avatar
      dmw

      That’s a useful summary but I think you can’t get to far assuming that MSRP relates to cost across platforms. Manufacturers cast MSRP with a rebate/incentive strategy in mind. Nobody knows with any accuracy the actual per unit profit of the cars, except for the people who signed very scary NDAs with the company.

      Generally, I’m not sure about your Passat analysis. It is not a stretched Jetta. It dwarfs the Jetta. In fact, it’s enormous. I heartily disagree that making it smaller will help sales. Americans will not go for a smaller anything. If you do, it better be premium. See, eg., how the euro Accord became the TSX. Even Audi continually up-sizes their cars.

      I think VW did exactly what was right with the Passat. Make it a bit bigger than the competition; make it somewhat sportier; make it stark and german looking so it’s the grown-up’s sedan. The problem is, it arrived in the teeth of insane competition and a segment that is loading features to levels you wouldnt get five years again in …an A6.

      The same applies for the Jetta, although they have missed an opportunity with the Corolla being so old and Honda flubbing the Civic, by their standards anyway.

      And in terms of features, VW is way behind in telematics and very stingy with basic features like dual-zone AC and back up cameras. Don’t tell me the lack the techonolgy. My CC has about six blank console buttons were in Europe, you get adjustable damping, self-parking, park distance control, and all kinds of frippery. I paid a lot less than they do over there even without those options, but I paid more than I could have to have them here. The feature gap was acceptable when you were comparing the overall interior qualify of a MkVI Jetta to a contemporary Mazda 3. It was no contest. Now, it’s a contest, and people are like, where’s my voice-control NAV in my 22K car?

      VW needs to come out with the medium and larger 3-row SUV ganz schnell. It’s ominous that that big SUV concept they showed has disappeared from the view. They showed some “coupe” version of it, like what they need is a Murano when they don’t even have Highlander. What is going on with them?

      VW is very good and relentless at keeping the Golf locked into the lead in that segment in Europe, when there are hordes of competitors. The Golf is the Camry of Europe. Somehow they are lost here. I think it may have to do with the fact that Audi rules the show in Herndon. Audi is the big boy in the U.S., they get the goodies from the VAG engineering works. VW has to go out and build a factory and try to hack out a living by building cheap, lost-cost cars. In Europe, Audi is in Ingolstadt. In Herndon, Audi is upstairs, literally and otherwise.

      • 0 avatar
        walker42

        “Americans will not go for a smaller anything.” That’s the kind of antiquated thinking that got VW into this mess. FYI, the new Accord is smaller than the old and is now the best selling car in America.

        If VW made the next Passat smaller of course it would have to look and feel more premium. The biggest problem isn’t the size, it’s the lack of personality.

        “I think VW did exactly what was right with the Passat. Make it a bit bigger than the competition; make it somewhat sportier; make it stark and german looking so it’s the grown-up’s sedan.” The Passat is somewhat sportier than the competition? Really? That was the case with the B5, not this one.

        “The problem is, it arrived in the teeth of insane competition and a segment that is loading features to levels you wouldnt get five years again in …an A6.” The Passat’s problem has nothing to do with features. It has to do with styling, refinement, material quality, performance, fuel economy and driving pleasure. It takes more investment and work up front to get these things right but the payoff is huge in terms of sales, price and profit.

        These are the areas in which companies like Hyundai, Honda, Ford and Nissan tried harder than the competition. VW thought they could just stretch the Jetta and call it done.

    • 0 avatar
      adamsd

      Except the only problem is if you go do the comparison is that the Passat is aimed at the large car segment. The Passat if you check the stats at least according to Edmunds is competitively sized to the Avalon, Charger, Azera, Taurus in most categories. It is not aimed at the Camry per say.

      This is where it runs into problems – it a good bit more than a camry in most trims and it doesn’t have most of the content that an Avalon has.

      • 0 avatar
        walker42

        Exactly. They’ve had a problem in execution AND strategy. What is the Passat supposed to be, an Accord competitor or Impala competitor? They woefully underestimated what it would take to compete in either segment (an execution failure). They didn’t really position the car so the market did that for them (a strategy failure).

        The price is right there with Camry, Accord, Altima, Sonata and Fusion. But it’s failing against those cars in volume. Big time. No I don’t mean it should be selling at the same rate, that takes years of getting every generation right. The sales are 50% of VW’s objective for the car. That’s with unexpected discounts and lots of fleet. With the better than expected economy my guess is that the rest are well ahead of their sales objectives.

        If we compare Passat to the Avalon, Impala, Taurus, Maxima and Chrysler 300 it’s an absolute disaster, transacting at least $5,000 less than any of those. That’s always been a tough segment to compete in what with Near Luxury just slightly above in price. The Avalon has refinement and, finally, pretty good looks, the Maxima adult sportiness, the 300 styling and attitude and the Impala all of the above. What was supposed to be VW’s offer in this segment, their name?

        They don’t need an Avalon competitor, A4 can handle that for folks who want a premium sedan. For folks who want more room than an already-roomy mid-sedan there will be the new mid-crossover. Even if they get the next car perfect there won’t be much volume, if they kick the price up $5,000.

        That means the next one has to be aimed at the heart of the mid-sedan market, if VW wants significant volume. Call it a Passat and keep the Jetta as is or call it a Jetta and replace the existing Jetta with a Golf derivative, since the new Jetta would be too big for fans of the old.

        About the current Passat you say it’s “a good bit more than the Camry”. In what areas? If it’s true VW wanted to compete against the larger sedans I mentioned, they were more deluded than I thought. A Golf platform car to compete against something like the 300, which is a RWD Mercedes in disguise? Against the Impala which is a Cadillac XTS in disguise?

        It’s not features that give those cars an advantage over the Passat it’s the cars themselves. The best of the mid-size class are also better, and cheaper!

        As for size give customers a list with Passat, Accord, Camry and Impala and ask them to rank order the cars in size. No one will get it right. Place the cars before them, ask again and they will still get it wrong because the physical differences and size perceptions are too close to call. And if they did consult Edmunds and found the Passat was two inches longer would that be a good thing or bad?

        Size doesn’t matter once you’ve cleared the threshold out of compact class – compacts are enormous these days. To think it does means your view of the US market is 40 years old. You think Americans value size and don’t care how the car looks or drives. That is VW’s problem in a nutshell.

  • avatar
    philadlj

    The CrossBlue is a step in the right direction:

    http://www.netcarshow.com/volkswagen/2013-crossblue_concept/

    If…IF they can get it down under $30K base. That’s Explorer/Highlander territory.

    AND they’ll need a smaller one too, like the Tiguan, but CHEAPER. Basically they should just steal all the best parts of the RAV4/CR-V/Escape, make it in Chattanooga (or some other funny-sounding place) and go to town.

    Some more perspective. The RAV4/CR-V/Escape CUV trio has combined for over 517,000 sales in the US (not including Canada) so far this year, and it’s barely September.

    By comparison, the entire Volkswagen GROUP (VW/Audi/Bentley/Lambo) has only managed 472,732 models in the US PLUS Canada. Just three models in a segment they DON’T EVEN COMPETE IN manage to outsell their entire outfit.

    Volkswagen’s way forward: Crossovers, crossovers, crossovers. Oh yeah, and crossovers.

    • 0 avatar
      bball40dtw

      Ford alone moves more CUVs in the US than VAG does product. Its possible that Escape and Explorer combined US sales may exceed VAGs total US portfolio sales. I know sales in other parts of the world may balance it out, but that is so much volume and profit.

      • 0 avatar
        walker42

        I wonder what they have planned for their CUVs. Two, a small and medium like RAV/Highlander? Would they share a platform? Just one of those? Which one?

        Or maybe a tweener like the CX5. Ordinary that might be risky but VW has had good luck with the Jetta and it looks like vehicles will be getting smaller down the road.

        I hate it though when there is only one and they try to do a long and short version. That never seems to work because one of them always ends up looking homely and gets forgotten.

        I hope they do just one, though I admit which one is a hard call. Focus can be a very powerful tool in the marketplace and also on the development side. Good for investment too.

        • 0 avatar
          bball40dtw

          I would guess two. The Tiguan and whatever else they decide to build. I don’t know VWs plant flexibility, but I’m sure they would love to build everything for North America in the US or Mexico. Puebla and Chattanoga could probably build CUVs as well if they really wanted. The Audi Q5 plant starts up soon as well.

  • avatar
    18726543

    I honestly don’t know how the reliability issues haven’t sunk VW by now. I spent time wrenching in dealerships, 2 Japanese brands and an American brand, and VW does things that just baffle me.

    With my work history my family members often come to me for advice with their vehicles. My sister-in-law ownes a 2008 Rabbit (which I DID NOT advise) and they had it to the dealership for some routine maintenance about 2 weeks ago. The tech informed my brother that the seals in the vacuum pump that operates the brake booster were starting to leak and it would be 800 dollars to repair.

    I thought for sure this guy was pulling his leg. Why would VW have designed the vacuum brake booster to have its own vacuum pump? Why wouldn’t VW drive the vacuum booster from an intake source like every other car I’ve ever seen? I talked to a guy at work who used to wrench at an independant that specialized in Euro vehicles and he confirmed that yes, the car does have a pump to run the brake booster.

    If anyone can explain to me why this would be…why the vehicle needs a multi-hundred dollar part to do what other vehicles do with a thread nipple…I would be interested to know because I’m honestly curious! And don’t say “German Engineering”!

    • 0 avatar
      Luke42

      I was going to say that diesels don’t make vacuum, except that I spent almost $300 at a VW parts counter to get a replacement engine-mounted vacuum pump for my Jetta TDI.

      It only took a few minutes to bolt on in the driveway, and failed to solve whatever the hell problem I thought I was trying to fix…

  • avatar
    xantia10000

    Thanks for bringing up the People’s Car!

    Here’s how I see VW, one of the most interesting brands in the industry. And by ‘interesting,’ I mean completely un-strategic for the US market. They had their share of good & bad luck, which is why they are where they are today.

    The original Beetle was their first and best example of good luck. Designed for a certain prominent German leader’s idea for socialist mobilization and not at all for the US, the Käfer was the right price and the right thriftiness for the times and rose to the top of the ‘import’ sales charts.

    The subsequent Rabbit – also not designed for the US, despite its first US transplant assembly plant – was the beginning of VW’s sales downfall. The ensuing 2nd-generation Golf & Jetta made matters worse. Since they were different from the domestic volume competition and red-hot 80s Japanese, they achieved a cult status, with weird and cool things like Sciroccos, GTIs and Vanagons.

    Meanwhile, the Japanese basically killed off all of those non-premium European brands in the US, like Fiat, Renault, Peugeot, Rover, Alfa, etc. VW was about to go that way in the early 90s, but the 3rd-gen Golf & Jetta (also not designed particularly for the US) kept the office lights on.

    Then came the A4 Jetta and B5 Passat that everyone loves to reference because they were soooo cool. In somewhat of an emerging pattern, these cars were also not designed for the US. But they were goooood (until you drove them off the lot), even better than the Japanese, for not that much more scratch. And here comes the luck kicker: the Euro-Dollar exchange rate was in favor of the dollar, so pricing was not a big problem.

    But when exchange rates reversed in the mid-2000s, the bad luck hit again, and the 5th Jetta & 6th Passat (also not designed for the US) Luftballoned in price and sales nose-dove. Didn’t help that the once-impeccable previous-gen cars were simultaneously sludging and shedding parts, and on top of that overlord Piech saw it fit to plop a $80k luxury sedan cherry on its steaming pile of Scheiße.

    That’s when somebody, somewhere in the Wolfsburg emprire said, “Neiiiiiin! Vee musT zell zee cheap cars for zee Amerikans!” And for the first time ever, they designed cars for American tastes… so they thought.

    I actually think they got is mostly right. OK, so the new Jetta isn’t all softouchy everywhere, and the new Passat’s styling is a trifle on the very, very, very subtle side, but these cars are consistently selling over 10,000 units per month (whereas the last expensive Passat was selling 10,000 units per year).

    So there you have it – let’s hope VW continues to refine its US strategy (now that they actually have one) and brings the right products to the market, such as those sweet-spot SUVs. And let’s hope their strategy relies less on luck, and more on good decision-making.

  • avatar
    Tostik

    Wrong about Volvo. Really wrong. Sales are up worldwide. Sales are roaring in China (up 40% for 2013 so far), nicely up in Europe, with a stinkin’ economy, and, while down a little in the US, the US market is 15% of Volvo’s sales. That’s a LOT of their sales – and Volvo is used to playing with a small market share. With the V60 coming in Jan, and a major make-over of all models in the next two years, sales will be rising in the US. You know Volvo is no longer in the grasp of the Ford bean-counters.

    And the 2015 XC90 is going to get a lot more than some new led lights. A lot more.

    I know this article is not about Volvo, but if you’re going to make strong comments about a car company, you need to do your research a little better.

    • 0 avatar
      28-Cars-Later

      I’ll be interested to see how it all turns out, but the $64,000 question to me is what can post-Ford Volvo do better than anyone else?

    • 0 avatar

      Haha. I think you’re missing the joke I was making. But here’s a post regarding how I really DO think Volvo has a future:

      http://www.thetruthaboutcars.com/2013/07/where-does-volvo-go-from-here/

    • 0 avatar
      Pch101

      “Sales are up worldwide.”

      According to Volvo, “For the period January to August, global sales were down by 2.5 per cent.”

      According to Volvo, “Year-to-date sales (in the United States) are down 5.7 percent over the first eight months of 2012″

      According to the ACEA, sales in Europe during the first half of 2013 were down 10.9%, and market share fell from 1.8% to 1.7%.

      “you need to do your research a little better.”

      Yes, you do.

  • avatar
    Jimal

    If I ran Volkswagen, this is what I would do.

    1. Get rid of the Eos, CC, and Beetle. The first two receive no marketing support and the Beetle redesign hasn’t changed the fact that Beetle reminds people of the Volkswagen of old.

    2. Get the new Golf – including the Cabriolet – here like yesterday. This whole late 2014 as a 2015 model is ridiculous.

    3. Expand the Golf lineup to include a refreshed Sportwagen and Tiguan.

    4. Use the new Golf styling as the basis of a MCE for the Passat and Jetta. They are good cars, but dull with a capital dull.

    5. Sell the upcoming CrossBlue 3-row SUV as the new Touareg. The current model isn’t so bad that you can’t save the name.

    6. GTI or Scirocco, but not both. Since 4-door GTIs sell, I’d lean that way.

    7. Offer 4Motion and TDI together on all models.

    8. Abandon the idea of selling the Phaeton. Bad idea.

    9. Recontent.

    10. Amarok. Save your arguments about mid-size pickups. VW doesn’t have a full-size pickup in their world inventory, and trying to compete against the Big 3 in that segment is a no-win, just ask Toyota and Nissan. Meanwhile they need to expand into new segments and they can have the mid-size segment essentially to themselves.

    • 0 avatar

      The problem is they chose to build the Amarok outside North America so it would be chicken taxed – one of the stupider ideas around, in my view. But what the hell do I know. Maybe it would be easy to retool for North American sales.

      • 0 avatar
        Pch101

        Most Americans would probably be more inclined to buy a Russian luxury sedan than a German pickup truck.

        Very few people want would a truck from a quirky brand that is best known for its cutesy advertising and “German engineering.”

        VW has a different image in the US than it does in much of the world. In Europe, a VW is a solid workhorse of a car that delivers a superior driving experience for the money and reliable operations.

        In the US, it’s a quirky car for hipsters, metrosexuals and yuppies in training, which breaks a lot and costs a lot to fix. Volkswagen is trying to be Toyota, when it has branding that is most similar to MINI or a FIAT. That simply makes no sense at all; the message doesn’t match the mission.

        VW really ought to give up these aspirations of becoming a dominant player in the US, and just focus on being the best niche player that it can be. The more buyers who they reach who are only marginally attached the brand, the more customers they will have to piss off.

        • 0 avatar
          challenger2012

          @Pch101 VW, “a quirky car for hipsters, metrosexuals and yuppies” is so true. A co-worker purchased a used VW, knowing full well its quality issues and high parts cost reputation. This is a guy who would walk on his hands because eveyone else walks on their feet. Odd is the norm for him.

      • 0 avatar
        DenverMike

        VW can figure out how to circumvent a 2.5% tax so 25% should be no problem. The question is, does VW want to bring every car in their (world) lineup to American? Honda doesn’t. Ford doesn’t. Toyota doesn’t. Mitsu doesn’t. OEMs have the exact US lineup they want and anything more would cannibalize it with less profitable vehicles.

    • 0 avatar
      dmw

      1. The Eos is on the way out. The CC is an EU car, based on the still-sold and paid-for B6 platform, so if they can clear the shipping and exchange rates, they will sell whatever they can.

      2. No one will buy a 30K Golf Cabriolet here. But the new Golf, OK.

      3. The Tiguan needs to be disappeared immediately. It’s pointless.

      5. The CrossBlue is “upcoming”? Maybe in 2016, by which time it will be backwards and under-featured.

      7. Best way to kill off the case for TDI as a hybrid alternative is to saddle it with 350lbs of AWD, not to mention killing the already marginal performance.

      8. There is nothing wrong with selling a Phaeton. It’s an old, amortized platform. It is, according to Jack, a brilliant car. Sell however many you can if it pays the boat fare.

      9. Please no more of the argument that, if I were in charge, I would sell a car with more content for the same price or less. If you were in charge, and that was your plan, the shareholders would fire you. If you want to sell more content for more money, and try to be Audi-lite, then be sure that Audi would come up to VWs room and rip out all the VVT, and variable steering, and modern NAV they saw and you would have nothing to wear to the ball.

      10. Chicken tax. As Doug said.

      • 0 avatar
        Jimal

        Congratulations on being 10 for 10 on being contrary.

        1. If the CC is such a money maker, why not market it?
        2. Why does it need to be a $30 Golf Cabriolet?
        3. Like the Touareg, the Tiguan name has some equity. A completely new model based on the new Golf would not be damaged by using the Tiguan name.
        5. Unfortunately I don’t have an argument on this point.
        7. 4Motion as an option with TDI would be a game changer.
        8. Nothing wrong with the Phaeton… except it makes a terrible Volkswagen.
        9. VW has already started adding back some of the content they removed in their backfiring attempt to go for volume. Twist beams and drum brakes are being replaced with IRS and rear discs. It turns out that people do prefer the soft touch plastics. There are other ways to differentiate from Audi.
        10. The Chicken Tax is nothing more than an excuse. There is capacity available in the U.S. and Mexico for a Chicken Tax free Amarok.

  • avatar
    Robbie

    I thought their old “strategy” of selling Euro vehicles wasn’t so bad. Those cars are the top of what the European market has to offer, so there will be always some demand for them in North America from urbanites. Then just hope that oil prices go up dramatically – they will once the world economy starts humming again – and at time, cash in.

  • avatar
    smartascii

    VW seems to be perplexed by the notion that American customers are looking for value. When you price your product higher than the competition because your production costs are high, nobody will buy it because nobody cares about your production costs. But when you respond to this by creating a purposefully cheap car sold for a cheap price, you’re not offering a value proposition, you’re just offering a cheap car.

    When you market your products as BMW-lite, you by definition are catering to people of limited means, because otherwise they would have just bought a BMW, but you at least have value attached to your product. When you price those products into the stratosphere, you remove one of the reasons for buying them in the first place. When you eliminate the BMW from them, you remove the other reason. And there aren’t all that many people who care how a car drives, anyway.

    If I were making decisions at VW, I’d expand my customer base by trading on design. The same people who buy Apple products because they’re pretty would flock to the dealership. Make it feel expensive, even if it’s not, and you’ll close the sale.

  • avatar
    Tostik

    If VW’s strategy is to be #1, I would say that’s not a strategy. A lot of companies have foundered on the goal of being #1 just for the sake of being #1.

    And I’m not a VW owner, but I might be interested if they brought the Amarok to the US.

  • avatar
    Cabriolet

    Well it was a good article for the usual VW bashing.Many more then if the article was about Subaru, Toyota or Honda. Those people get very mad.
    I would like to reply to 18726543 about the vacuum pump on a 2008 VW he wrote about. I feel if people are going to complain about a certain manufacturer they should post with some truthful facts. Yes Rabbit’s, Jetta’s and other models used a vacuum pump for the power brakes. A lot of manufacturers do. My wife’s Volvo a 2004 V40 used a vacuum pump that we had replaced years ago for $350.00. A new vacuum pump for the VW rabbit costs $195.00 with a little less then an hour to install. If someone paid $800.00 they were just stupid. Just wanted to clear the air so that some of these posting’s can be read with some honest facts.

    • 0 avatar
      18726543

      Ok, so my brother would be stupid to pay that kind of money to have it done. You mentioned your Volvo had the same thing. Is it a European car thing? My question remains: why bolt a vacuum pump to a gasoline engine when gasoline engines generate vacuum?

  • avatar
    jbltg

    Thank you Doug for a great read! The first paragraph is priceless and stands on its own! My sentiments exactly having owned some VW products, and I won’t forget them for their senseless cheapness. I won’t buy another, just the same way I feel about many of the domestic brands, so there.

  • avatar
    BlackDynamiteOnline

    The problem with VW is not their lineup. The problem is VW itself.

    The way they do business. The way they build cars. The way they service the poor cars they actually sell to the uninformed. The way they style their cars, or don’t style their cars. The whole mindset of VW USA.

    In a world where everybody is buying a small crossover, VW has figured out a way to sell $10k a year, and work it out so that their one small crossover, which is really SMALLER than vehicles like the CRV and Equinox costs $5-10k more comparably equipped?

    VW is the only company in automotive history to finish in the Bottom 5 of JD Power’s Initial Quality Study and Dependability Study for 10 years straight. That’s a real accomplishment!

    So how do you celebrate? Price your SUVs out of the market, wait almost 15 years to jump on the affordable hybrid bandwagon, and spend your moonlit nights redoing the Phaeton?

    It’s amazing how poorly managed this company is, and that they were recently the #1 selling car company in the world (2011). How they run VW USA must be an abhoration (sic). It can’t be this bad worldwide. It just can’t be!

    And it seems VW USA’s goal in life is to model themselves after Toyota, at least Toyota of a few years ago, and make cars with no style with basic interiors. They seem to think THAT is their secret sauce. No. The secret is building cars that work. That do what Toyota says they will do. That’s where you start. If you actually do what you say, word gets around. And around. And around. That’s Toyota’s secret sauce. It’s simple. Just not easy.

    Conversely, if you do the exact opposite, and build cars that work like disposable diapers, that rep will spread even faster, and will last longer, be harder to overcome. Good news travels fast, like Usain Bolt. But bad news travels even faster. Like an actual lightning bolt!

    Build a new lineup, but that wouldn’t change a thing. You know why? A car, or a car company, just like anything else, is only as good as it’s foundation. If you build cars just to make money, or just sell the most you can possibly sell, it will show. The People will snuff it out. Sooner, or later.

    But if you work to build A BRAND, and really forget about stockholders and sales titles, and profit margins, your customers, The People you ultimately work for, will notice that too. And guess what happens. They tell someone else to take notice. That’s the car business. Done right. When you think about people. Not profits. Not sales.

    In a totally unrelated story, VW USA has lost sales for 5 STRAIGHT MONTHS. In a market that is up about 10% this year…..

    The author said it best in his very first paragraph. VW’s best talent is building lifelong Toyota customers. That’s the car business done wrong.

    When “Sign and Drive” doesn’t work, where do you go from there?
    BD

  • avatar
    Luke42

    “It’s time to talk about Volkswagen. You know Volkswagen: they make the Jetta, which is possibly today’s most adept compact sedan at churning out lifelong Toyota customers.”

    Hey, I resemble that remark!

    Seriously, my Jetta was junk that happened to be fun to drive… When it ran.

    My Toyotas are useful dependable tools that are pleasant enough to drive. And they get the job done. Every day.

    I’m not buying another German car, until they do a Dominos Pizza style apology for their reliability. I want to be a VW fanboy, because I like the cars, and because I have some great early memories of wrenching on VWs with my father. Alas, my 2001 VW Jetta TDI wasn’t any more reliable than my father’s air cooled Volkswagens – but it was far more expensive and challenging to repair. So, I drive Fords and Toyotas.

  • avatar
    walker42

    “if Volkswagen plans to hit these crazy volume goals, it’s time to get a new lineup. A few more cars; a few more SUVs. A hybrid.” Doug no car company can afford to do everything, meaning have a competitive diesel all over the place and also a competitive hybrid. Not even the two big boys, Toyota and VW. You have to pick a strategy and go for it.

    In my opinion the ONLY thing VW has done right was to go for diesel in the mainstream segments. Someone posted that TDI makes up 40% of VW sales in NA. Wow. Hybrids sure as heck aren’t 40% of Toyota’s sales.

    It was much smarter having the only diesel offering below $40K and forgoing a hybrid. Everyone has one of those it seems.

    Also VW doesn’t need more cars, they need fewer. Your point was to go for profit, not sales, right?

  • avatar
    justgregit

    I think this article confuses Volkswagen the brand in the US with Volkswagen the global company.

    I really don’t know how much they care about this market (hence the lack of VW branded SUVs, though they do have about 80 different Audi ones), but they have been pushing both volume and profit globally. Just pulling up the financials on Google Finance (https://www.google.com/finance?q=OTCMKTS%3AVLKAY&fstype=ii&ei=0W8wUoDYNsy0qAHYPQ) the company reported Q2 Gross Margins >10 percent higher then Q2 2012, and operating profits were higher, but less so. Gross margins are where you look at vehicle profitability, since it doesn’t account for administrative/overhead and R&D costs (or depreciation and amortization).

    Globally the company is growing both volume and profits. Don’t forget, they sell their highest margin vehicles through Bentley, Porsche, Lamborghini, Bugatti, and Audi. The Golf is also the #1 selling vehicle and the world (and I would argue the only halfway decent one they sell in North America anymore), and they also sell competing lower market vehicles through SEAT.

    I’m not defending the VW North American options under the VW brand, because I think most of them are bad. I have a Golf, which I like, but I think the new Jetta’s and Passat’s are ugly, and while the JSW has potential it needs to be updated. But to make an argument that the company as a whole is ignoring profitability globally misses the bigger picture. Especially when they are moving onto a few global platforms for all vehicles which will further decrease the cost of production.

    • 0 avatar
      bball40dtw

      The problem is many things that win in the American marketplace are now winning everywhere else. Derek has written extensively about how CUVs are the new hotness going foward. VAG continues to address this on a luxury level, but doesn’t have a competitive product (especially price wise) in the mass market arena.

      There are many things VW does right globally. Their premium offerings are cash cows that Ford, GM, and Toyota, along with everyone else, wishes they had. They have misjudged North America though, and are late to the non-luxury mini-CUV party globally.

  • avatar
    jhefner

    Reminds me of a cartoon I saw where a German soldier lands in Africa to find a garden paradise with all the animals playing; the next panel shows all the palm trees and animals arranged in neat rows alongside a road where the local natives goose step past the approving officer.

    England dominated much of the first decade of the Industrial Revolution; but by the turn of the last decade, Germany was quickly catching up the diesel engine and naval technology; military technology like Krupp arms and Fokker and Junker aircraft gave them the boldnest to start WWII.

    The last Made In England stuff I bought are a trio of toy steam engines and some model railroad stuff. But once again, prior to WWII in particular, Germany was well know for toy steam engines by Bing, Falkin, and others in the Nirbirgring area, and model trains by Marklin and LBG. The real German steam locomotives are still scattered around the world right along with their British and American peers.

    You are on a roll today Kenmore; carry on cold steel one.

  • avatar
    Marko

    My father bought a Passat TDI earlier this summer. Why? Because he HAD to have a fuel-efficient car, and all of its competitors were either too dull (Cruze Diesel and Camry Hybrid), too expensive (Fusion and Avalon), too weird (Prius, C-MAX, LEAF, and Volt), uncompetitive (SonOptima Hybrid and Malibu ECO) or not yet available (Mazda6 Diesel and Accord Hybrid).

    Ultimately, it came down to the Fusion Hybrid and Passat TDI, and the TDI won because the dealer was much more willing to give a test drive, and much better deals could be had (about $4K off sticker on a TDI SE). VW was also offering excellent financing rates.

    So VW got one sale, albeit ironically, since the deals were likely the result of sales falling behind.

    Will VW get another sale from my father in a few years? Time will tell…

  • avatar
    phaeton

    I think VWOA lineup should look like this………

    Polo
    Santana (PQ25+)

    Jetta (Hybrid, GLI etc)
    Golf
    SportWagen
    Beetle
    Beetle Cabrio

    Scirocco
    Passat Cabrio
    Concept BlueSport

    Polo SUV
    Tiguan (Coupe & 5 seater)
    CrossBlue (Coupe & 7 seater)

    Passat NMS (& Coupe)
    Avalon fighter
    CC (& CC wagon)
    Phaeton
    Touareg

    Amarok
    Caddy Panel Van / 7 seater (SWB & LWB) 4Motion.


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