By on July 25, 2016

Volkswagen Chattanooga CrossBlue

SUV sales are exploding in the United States. It doesn’t just seem as though the quality, origins, price, power, credibility, and style of a utility vehicle matter not one whit — it really doesn’t.

Critically panned and antiquated SUVs such as the Jeep Compass and Jeep Patriot are selling better than ever. The original Audi Q5, on sale since 2009, is on track for its seventh consecutive year of growth. Sports car builder Porsche now produces 60 percent of its U.S. sales with the Macan and Cayenne. The Buick Encore, a questionable Chevrolet Sonic-based subcompact crossover, is easily Buick’s best-selling model. Sales of the Ford Explorer are on track to rise to a 12-year high.

Easy peasy. Build it and they will come. Too small? No problem. Too big? Not an issue. Too ugly? More power to you. Impractical? Ignore the U in SUV; it won’t hold you back.

It’s therefore a great time for Volkswagen to finally release an SUV in the heart of the market.

Tarnished by a diesel emissions scandal that essentially erased one-fifth of its potential U.S. sales, Volkswagen rapidly approaching inconsequential status in America, forever lacking a broad SUV/crossover lineup.  An affordable three-row crossover with a name that suits an American audience and development that takes seriously the expectations of the U.S. market should, theoretically, be the answer.

Yet what’s past is prologue. Everything Volkswagen has “accomplished” in the U.S. SUV/crossover arena to date suggests a lack of understanding of the market. As a result, only a relative handful of Touaregs and Tiguans have been sold in the U.S. in the entire history of Volkswagen’s SUV effort.

These are their stories.

TWAAAAHR-EGG?
Originally hoping for 45,000 annual U.S. sales, the Volkswagen Touareg was launched as an upmarket competitor for the Acura MDX, BMW X5, and other premium SUVs at a time when Volkswagen, full of Phaeton dreams and Passat W8 delusions, believed the company should become Audi.

2016 Volkswagen Touareg

Touareg volume peaked at 27,706 sales in its first full year on the market, 2004. U.S. Touareg sales then plunged in five consecutive years. Between 2004 and 2009, Touareg volume slid 84 percent. Recovery in 2012 — when Touareg sales jumped 140 percent from its 2009 low — was followed up by declines in 2013 and 2014, flat-lining in 2015, and a one-third drop through the first six months of 2016.

The Touareg was never going to sell like a Ford Explorer or Chevrolet TrailBlazer or even the between-sectors Acura MDX. But the Touareg, whether the 2004-2010 first-generation example or the 2011-onward second iteration, wasn’t just a flop relative to Volkswagen’s rival mainstream brands. The Touareg is also markedly less popular than similarly priced luxury SUVs.

Through the first-half of 2016, the Volvo XC90, Audi Q7, Infiniti QX60, Lexus RX, and Mercedes-Benz GLE are up 33 percent to 126,230 units: 15,919 XC90s, 14,741 Q7s, 20,972 QX60s, 49,412 RXs, 25,186 GLEs. Touareg sales are down 33 percent to only 2,203 units, 45 more sales than the Lincoln MKT managed during the same period but far less than even rare utilities such as the BMW X6 and Land Rover LR4.

2016 Volkswagen Tiguan

TIGUAN
The Touareg was Volkswagen’s first effort, but not its most common. The Tiguan launched in 2008 with hopes for higher volume in the small SUV segment. (Eight years later, North America is still months away from availability of the second-generation model.) Unlike its Touareg strategy, Volkswagen initially aimed high with pricing, but not to the extent that the Tiguan was entirely out of sync with the Honda CR-V and its mainstream rivals.

Also unlike the Touareg, the Tiguan recently rode the wave of SUV excitement despite its old age, small cabin, and premium-fuel-only gas tank. After sales fell to a four-year low in 2014, U.S. Tiguan volume jumped to an all-time high in calendar year 2015.

But an all-time high for the Tiguan is nevertheless a frighteningly low figure for a vehicle operating in such a high-volume category. Only 35,843 Tiguans were sold in America last year — 212,756 in the nameplate’s history — while 11 competitors produced more than 100,000 sales, six topped the 200,000 mark, and three generated more than 300,000 calendar year sales.

Meanwhile, Tiguan growth has continued apace in 2016 as sales of almost every Volkswagen nameplate crumble. Tiguan sales are up 50 percent, year-over-year, though the Tiguan owns less than 2 percent of its category and sales of all other Volkswagens in America are down 26 percent as the market tracks toward a second consecutive record year.

TTAC VW SUV sales chart

TERAMONT?
Volkswagen is, therefore, tapping into growth in the compact SUV/crossover market, but the brand has missed the rush to subcompacts (not that the undersized Tiguan is much larger) and found itself on the outside looking in as consumers once again began snapping up Ford Explorers, Toyota Highlanders, and even Dodge Durangos.

Subcompact crossover sales are up 63 percent this year, an increase of nearly 100,000 sales, as the market expanded rapidly without assistance from, for example, Volkswagen.

The aforementioned Ford/Toyota/Dodge three-row trio alone earned 18,151 additional sales in the first-half of 2016, year-over-year, for a total of nearly 250,000 units.

Volkswagen, meanwhile, sold 22,759 total utility vehicles between January and June.

No doubt, only a look at rivals will lead Volkswagen to believe that there’s a future for the brand in America’s vast SUV/crossover market place. Volkswagen surely can’t look back at its own U.S. history as a reason for hope. As the passenger car market fades and demand for Volkswagen’s own cars all but dry up, the future of the brand in America relies very much upon the Teramont, or whatever Volkswagen will call the Chattanooga-built SUV, and the next Tiguan.

Early indicators suggest Volkswagen knows the new SUVs won’t have it easy, and success won’t be instantaneous. “This brand needs some years to really recover and step up then from there to a further profitable growth,” says Volkswagen’s North American CEO, Hinrich Woebcken.

We’ve seen what the Tiguan and Touareg can do with “some years.”

[Image Source: Volkswagen]

Timothy Cain is the founder of GoodCarBadCar.net, which obsesses over the free and frequent publication of U.S. and Canadian auto sales figures. Follow on Twitter @goodcarbadcar and on Facebook.

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55 Comments on “Can Volkswagen USA Succeed With SUVs?...”


  • avatar
    CoreyDL

    I really don’t get their SUV “strategy,” if you can call it that. Holding onto things for too long, pricing stuff above your class, lacking a 7-seater. What the heck?

    The Q7 could have been turned into the Terracan years ago. They were lazy about it, and are now reaping what they sew. Bringing an entry after they’ve been slammed with scandal is too little, too late.

    We don’t really need VW in the US, people can buy an Audi or a Porsche instead – just sell the Golf through select Audi dealerships and drop everything else.

    • 0 avatar
      gtemnykh

      Terracan you say?!

      s1.cdn.autoevolution.com/images/gallery/HYUNDAITerracan-3214_2.jpg

      • 0 avatar
        CoreyDL

        Oh, I know ;)

        Always liked seeing them when I was overseas. Like the styling, like the cladding, the interior was pretty good, and it had solid and aged Mitsubishi bits underneath. If they were available in the US, I would have no problem driving something with a Hyundai badge on the front.

        • 0 avatar
          gtemnykh

          Saw a Montero that this Hyundai borrowed the chassis from (gen 2) pulled over on the side of the road by a cop and a drug search in progress. The monty looked a bit worn but not too rusty or ragged. You drug addicts didn’t deserve that fine piece of engineering!

          • 0 avatar
            CoreyDL

            And they ride so nice! The Terracan almost seems like it would be one of those things Canada would get but not the US.

        • 0 avatar
          bumpy ii

          Closest we got was the Borrego, if you can find one.

          • 0 avatar
            CoreyDL

            Those scare me with their 1-2 year availability, lack of Hyundai counterpart, and general weird nature.

            Plus the interiors are dreadful.

          • 0 avatar
            dukeisduke

            They only built 10,000 Borregos, and I think half of them ended up in my town – I see several of them pretty regularly.

          • 0 avatar
            CoreyDL

            My usual thought when I see one is “Hey, that late model Tribeca looks weird and big.”

            There is an orange colored one around here somewhere. Dislike.

          • 0 avatar
            gtemnykh

            I personally loved the styling (front especially) as well as that burnt orange color. BOF (but with IRS) and available V6 and V8 engines that both made good power, transfer case with By all accounts perfectly good alternatives to Explorers and Pathfinders of the era (all shared the BOF+independent suspension+fold-flat third row layout), except for that limited availability is indeed kind of spooky in a used car. An overly stiff ride (like the Pathfinder) is another issue. The overly-electronics controlled 4wd system that may not have a hard 50/50 front to rear split(?) is yet another potential downside.

            So overall not too bad, but why risk it when you can scoop up a late BOF Pathfinder for an equally low price, with the same performance characteristics both good and bad, but without the headache of owning a rare vehicle.

    • 0 avatar
      Jimal

      The bigger issue is that Volkswagen itself doesn’t get its SUV strategy.

      • 0 avatar
        SSJeep

        No one goes to a VW dealership looking for an SUV/CUV. The few sales that they do get are people who want to be “different” and drive a “different” vehicle. The Tiguan is so long in tooth that it should be pulled and replaced with an implant. The Touareg is also past its prime, but is comfortable and unique. Its also horribly expensive and outclassed by other vehicles in its bracket.

        To add insult to injury, the first few years of the Tour-egg were marred by absolutely horrible reliability – especially on the diesel editions. Getting stranded on the side of the highway due to “electrical gremlins” on the new Tour-egg does not make for a repeat buyer.

        The best thing VW could do would be as follows:
        – Use the Porsche Macan chassis with a turbo 4 VW engine and a standard manual transmission as a new small SUV to replace the Tiguan. And dont call it a Tiguan!
        – Use the Audi Q5 chassis with the silky Audi V6 (with a VW on the valve cover) to design a replacement for the Touareg – and dont call it a Touareg!

    • 0 avatar
      05lgt

      Can I call it the VW Turducken?

    • 0 avatar
      Big Al from Oz

      CoreyDL,
      What started out as two promising Korean SUVs, the Terracan and Sorento, ended up being the Santa Fe and Sorento CUVs we have today. I find that a pity. I had an 04 Sorento with all the leather and bling, it was a nice vehicle, especially for the price they wanted. It was on competent off road, but as a compromise between on road comfort and some off road I don’t think there were any vehicles for the price to compete, or even come close.

      It was fuel pig. I used to only get around 18 litre per hundred km doing a Katherine to Darwin run on the highway. But, that was constantly sitting on 150kph.

      The only hope for a midsize Hyundai SUV, with BOF, hi and lo will be if Hyundai Australia have their way with a Hyundai mid size pickup.

      • 0 avatar
        gtemnykh

        1st gen Sorentos are definitely under-appreciated rigs. Here, they mostly ended up very quickly in the hands of the poor credit and BHPH crowd, and most are in very sad shape indeed. The availability of a stick shift with V6 and 4wd was pretty rare by the 2000s. Like you said, BOF, solid rear axle, 2 speed transfer case and decent clearance/angles, all at a very reasonable price. I think the styling was spot on too, at the expense of some utility perhaps.

  • avatar
    FreedMike

    Do you really have to even have a strategy to sell SUVs? Seriously, if Jeep can still sell the Compass, anything goes.

    • 0 avatar
      threeer

      Price sells. I looked at a used Jeep (Patriot, admittedly) and just couldn’t. But I can see where people would be interested, as they certainly are cheap enough.

      One would think all a company has to do is slap the CUV/SUV moniker on a vehicle and sell it, but VW still seems to struggle although the Tiguan has made a somewhat of a resurgence as of late. They don’t sell on a value proposition, nor do they (necessarily) sell on a premium proposition, though they quickly price themselves into that territory. Tough position to be in.

  • avatar
    Pch101

    VWoA’s fundamental problem is that it wants to use niche branding to move a large number of vehicles.

    This simply doesn’t make sense. You have to either borrow from Hyundai and position yourself as a Japanese-quality automaker (or at least close enough to Japanese quality) with fair prices, or else pitch yourself as something unique and different with the understanding that this latter strategy can earn loyalty and passionate supporters but not volume. You can’t tell Americans how wonderfully German and driver-oriented that you are, and then be shocked when this doesn’t get Joe Sixpack, his wife and two kids flocking to your dealerships.

    • 0 avatar
      tedward

      This for sure. It’s not like their german angle needs to be dropped entirely, but the family oriented heart tuggers need to be their mainstream broadcast media focus. At the risk of sounding like a broken record vw dropped the ball when they didn’t focus primarily on spots exactly like their superbowl passat ad. Their competitors certainly noticed the ads effectiveness, Subaru is literally advertising emotional states instead of product right now.

      • 0 avatar
        Pch101

        Well, Subaru is also a niche marketer. Subaru has a solid message for its US demographic, but that message is also going to cap how far that the company can go.

        It’s OK for VW to position itself as the affordable European alternative if it understands that such a message will only allow it to own a big piece of a small market in the best case scenario.

        Otherwise, it ought to be the quality family car company with great service, features, etc. But that would mean radically changing the engineering of the vehicles and the culture that produces them, which is a tall order.

        • 0 avatar
          tedward

          I think Subaru has stopped niche marketing and their awd product niche has become more than a regional consumer shopping point. I don’t think their newer product inspired it, aside from growing in size like everyone else did, I think a combination of weather events and messaging reaching critical mass led to their current rise.

          I actually agree with vw’s decisions lately in the us market, I think they have been trying to pivot towards the practical family angle for some time now. What they need to stop doing is being first in the sandbox with new technologies. Every time the brand has been first at price point with something they’ve paid a steep price for it reputation wise. 1.8t, w8, modern tdi, cvt, dsg, direct injection, interior materials, etc… I think this is a major part of what vw europe simply doesn’t understand about the United states. If they can resist the temptation from here on out their current lineup of technologies puts them in a pretty good place actually. Every one else in the market is moving towards exactly what they offer, or is already there but with some holdout legacy engines. I disagree with you on that, because their past sins have led to their current advantages tecology adoption wise.

          This occurred to me while cross shopping my wife’s eventual gti. Every other new car choice was either premium in brand or in its first generation of a modern engine design.

      • 0 avatar
        CRConrad

        Actually, Subaru is only “literally advertising emotional states instead of product” _on the surface,_ but subliminally the same ads are at the same time, dog-whistle-style, directed at a specific demographic: Lesbians. HTH!

        No, I’m not kidding: http://priceonomics.com/how-an-ad-campaign-made-lesbians-fall-in-love-with/

    • 0 avatar
      SCE to AUX

      “or else pitch yourself as something unique and different with the understanding that this latter strategy can earn loyalty and passionate supporters but not volume”

      Agreed. Sadly, VWoA has been reduced to this strategy (if they adopt it), because trying to play mainstream with the other US players has bombed. Mitsubishi has the Mirage, Volvo has the XC90, and Mazda has… well they *had* the rotary RX7/8.

      Mazda’s CX-5 is a good example of what VW is probably going to do. Unfortunately for Mazda, the CX-5 holds only a 3.9% share (51k) of the small SUV market this year (albeit twice Mazda’s overall market share). But even such a position for VW’s new entry cannot save them. They need something that can approach 100k annual sales to really make a difference.

      • 0 avatar
        Pch101

        “trying to play mainstream with the other US players has bombed”

        I don’t think that VW really tried.

        VW learned that Americans require a larger back seat and that they aren’t willing to pay as much as Europeans are willing to pay, so they accommodated those issues with US-spec models.

        What VW hasn’t figured out is that reliability/ low-hassle ownership is key for mainstream vehicles. VW’s have a reputation for quality in Europe, but not here.

  • avatar
    markf

    As long as they give a weird, unpronounceable name they will sell in droves……

  • avatar
    Superdessucke

    They should just take a Russian Lada Niva and stick a VW badge on the grill. I bet it would be VW’s top selling model, and would allow them to keep building Golf Rs for the cool kids.

    • 0 avatar
      heavy handle

      Chevrolet already sells a Niva in some markets. Mechanically the same as a Lada Niva, but with a Geo Tracker-style grille.

    • 0 avatar
      gtemnykh

      That would actually be very cool, but unfortunately totally impossible in terms of crash test standards, emissions standards, and probably a bunch of other standards that the designed in the 70s Niva can’t keep up with! I could definitely see the appeal of a cheaper-than-Wrangler rough and tumble 4wd. An untapped niche, but again CAFE standards and all that make it more of a liability than anything else.

  • avatar
    manny_c44

    They could slap a VW badge on the current Skoda Yeti and have one of the best selling SUVs in the country I’d think.

    • 0 avatar
      CoreyDL

      They’d get all of the former Element customers, since Honda said “F*ck off and buy a CRV.” those years ago.

    • 0 avatar
      Superdessucke

      Yes, and it’s been field tested at the shopping malls of New Dehli, which has much higher speed bumps, I’m told.

    • 0 avatar
      markf

      +1 They wold definitely sell a bunch

    • 0 avatar
      Adam Tonge

      They don’t have enough dealers or production capabilities to make it one of the best selling SUVs in the country. They’d have to spend a bunch of money federalizing the Yeti and tooling up a different factory. Then they’d have to sell it against entrenched competition with better dealer networks and brands.

    • 0 avatar
      Big Al from Oz

      manny,
      The Yeti here in Australia is very much a niche vehicle. I can’t see a Yeti selling in huge quantities in the US.

      If VW sell the Yeti, it will not be a Yeti as well.

    • 0 avatar

      They would sell a bit for 3 years until the public figures out that Skoda is a substandard VW. A friend of mine had something like Oktavia. It was a nightmare. I had no idea any automaker made cars anymore which broke suspensions. The only time I saw an A-arm snap before was when another friend drifted a Neon into a concrete divider. These things are just not supposed to happen but it seems that Czechs mix donkey poo into their steel when they clone Passats.

  • avatar
    sportyaccordy

    I think it could work if they get the size and content right. They need to do to the Tiguan/Touareg what they did to the Jetta/Passat- decontent and right size/price with the competition. Unlike the C and D sedan segments CUVs are still growing FAST, so as long as their offerings are competitive they should be fine.

    I think the “Teramont” name is a bit of a mistake… they should just ditch the Q7 platform and let the Touareg be a big Passat. 2 row = Touareg, 3 row = Touareg Grande or whatever like Hyundai with the Santa Fe.

  • avatar
    eggsalad

    “Critically panned and antiquated SUVs such as the Jeep Compass and Jeep Patriot are selling better than ever.”

    Because they’re CHEAP CHEAP CHEAP, and buyers who don’t know or care about quality and antiquated design love CHEAP.

    Cars.com shows dozens of new Patriots under $13k. If you don’t know or care about FCA’s reputation, that’s a whole lot of vehicle for the money. It’s hard to find a Versa for that dough, even.

    • 0 avatar
      gtemnykh

      “It’s hard to find a Versa for that dough, even.”

      You can find Versas for well under $10k all day long, closer to $8k in fact if you’re willing to take a one way fly and drive.

      • 0 avatar
        eggsalad

        Okay, fine. But at least on paper, the Patriot looks like a lot more vehicle for not a lot more money.

        (And I’d love it if you would provide me a link to a new $8k Versa! I might just buy it!)

        • 0 avatar
          gtemnykh

          http://www.cars.com/vehicledetail/detail/668897461/overview/

          No mention of mandatory trade ins or anything, the fact that some other dealers are in the $8k ballpark makes me think this is legit.

          • 0 avatar
            sportyaccordy

            Wow, that’s amazing! I think this car deserves its own article. I feel like I traveled through a time machine!

          • 0 avatar
            gtemnykh

            Yeah I kind of wish I saw this before I scooped up my cheapo Maxima. If the goal is overall low TCO/mile, I figure one of these $7,500 Versas takes the cake. There’s no way you couldn’t sell it for $6000 after a few years of driving and 30-40k miles. That is CHEAP motoring right there. All under warranty with new car smell, fresh tires shocks and brakes! I haven’t checked, but does Nissan do one of those free maintenance deals for a few years on new cars?

  • avatar
    dukeisduke

    If they stick with their SUV strategy, it’ll be overpriced, unappealing, and carry the name of some obscure nomadic tribe. Bedouin?

    Remember when the Touareg launched? VW ran a TV campaign where people tried to pronounce the name, where one guy gets it right (“TWAAAAHR-EGG”), but VW in their infinite wisdom decided to pronounce it “TOUR-regg”. Like the way Hyundai Americanized their name from “HYOON-die” to “HUN-day”.

  • avatar
    dukeisduke

    And the wheels on that three-row? They look like they came from Rent-A-Tire.

  • avatar
    Featherston

    “The Buick Encore, a questionable Chevrolet Sonic-based subcompact crossover . . . .”

    I don’t usually root for the giant corporation, but I’ve got to side with General Motors in the case of TTAC’s ongoing grudge against the Encore. GM recognized a niche in the market, filled it with a well executed vehicle, and TTAC staffers–with the notable exception of Alex Dykes, https://www.thetruthaboutcars.com/2013/04/review-2013-buick-encore-video/–have been boo-hooing ever since.

    Not every contributor needs to be as genteel as John Davis or Saabkyle, but a dash of objectivity wouldn’t hurt.

  • avatar
    Big Al from Oz

    First what SUV does VW manufacture? I’ve only seen CUVs. SUVs are genuine off road capable vehicles.

    I believe VW could succeed, but it will take time. As mentioned, VW will need a year or two to get over Dieselgate first.

    VW, although common I don’t consider a “mainstream” brand in the US or even Australia. VW does have it’s avid followers, like most German brands.

    VW doesn’t have the prestige allure, it’s viewed as an expensive “commoners” vehicle. This is not a good position to start from.

    VW has to be priced competitively with the likes of Nissan, Toyota, Chev, etc. I don’t think VW should tackle the budget beaters like Jeep and the Korean vehicles.

  • avatar
    APaGttH

    No. No maker that wants to wear the, “number one producer of vehicles by quantity in the world,” badge is going to succeed without a viable CUV/SUV lineup in the United States.

    Next question please.

    • 0 avatar
      sportyaccordy

      But US focused CUVs are so… how you say… proletariat.

      Can we interest you in a $60K Touareg? Maybe we bring back zee Phaeton? Ahh- American is ze spohrty type. We give you Scirocco!

      Seems like VW really loathes the prospect of playing by America’s rules.

  • avatar
    smartascii

    People generally buy one of three things: 1) American, 2) Cheap, or 3) Reliable. If customers don’t want one of those, they want 4) Impressive Badging. VW will never be an impressive badge, so they can give up on that right now. They also will never be American, so that’s out. I’m not sure what’s in the water in Wolfsburg, or what manner of dysfunction inhabits the VW corporate culture, but at least for now, reliable products seem to be beyond their capacity. So. Cheap it is! Build a 3-row crossover with power windows and locks and a screen to pacify the back-row nose-pickers, and sell it for less than $25k. If you can actually make it such that your contempt for people who don’t make $750/mo car payments is not detectable, you’ll do even better. And lastly, make it look nicer than the other options. “It’s pretty” sells a lot more cars than “It’s good.”

  • avatar
    turf3

    I liked the Tiguan we rented for a week better than the Outback we recently bought. But until there is real long term evidence that VWs can be operated reliably for my kind of ownership timeframe (10+ years, typically), I’m not interested. Also not interested in the special VW parts that cost $1000 when everyone else’s version of the same component costs $150. I have heard too many horror stories about exhaust system components especially.

  • avatar
    mchan1

    CUVs have been the rage for awhile now.
    Haven’t seen too many Touregs in my area but lots of Tiguans.
    I like the Tiguans despite it being overpriced and relatively cramped as Tall drivers should avoid the Tiguan!

    If VW would fix the ergonomics and roominess and lower the price, considering that the ‘stripper’ base version costs Too much, the Tiguan could sell more and be competitive against the Rav4 or CR-V. Right now, it’s Overpriced for what you get (almost nothing in content that matters) and it’s a gas hog, even though it handles relatively well in the snow with AWD.

  • avatar
    Lorenzo

    Teramont? No. Here’s another suggestion: When aviation pioneer Hugo Junkers was forced to design planes for the Kaiser in WW1, he came up with the world’s first all-metal monoplane, the J-1. German critics, not realizing it was the wave of the future, called it the “tin donkey”, or Blechesel. they’ve been using unpronounceable names, so stick with it, and this time put some history behind it.

    It would be fitting, since Junkers died not far from Wolfsburg, while under house arrest by the Nazis, who wanted him to sell his factories and aircraft patents for pfennigs on the Reichmark. He died of a heart attack during a marathon “negotiating” session (browbeating) on his 76th birthday.


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