By on June 2, 2017

2017 Volkswagen Passat, Image: Volkswagen

The Volkswagen Passat has a roomie.

Production of the Volkswagen Atlas, Volkswagen of America’s first three-row SUV and the automaker’s first three-row vehicle since the Dodge Grand Caravan-derived Volkswagen Routan fled the scene in 2014, began earlier this year in Chattanooga, Tennessee, previously known as the Passat’s factory.

The first 1,610 copies of the Atlas were sold in May 2017.

Volkswagen, which built the Tennessee assembly plant as part of a goal that would see the brand selling 800,000 vehicles in America per year by 2018, originally intended to build 150,000 vehicles annually in Chattanooga. Only half that capacity was used last year.

If the Volkswagen Atlas becomes the hit the Volkswagen Passat never was, what might that say about the North Americanized Volkswagen Passat’s future? 

Passat sales plunged 24 percent in May 2017, a year-over-year loss of 1,674 units compared with May 2016. Passat sales were on the rise in early 2017, but only relative to 2016’s poor output.

Volkswagen is on pace for only 81,000 U.S. Passat sales in 2017, having averaged 108,000 between 2012 and 2014. Sourcing those sales — for an older model; for a Volkswagen in a slow category post-diesel-emissions crisis — has required a level of discounting not encountered early in the current Passat’s tenure.

This is the twelfth edition of TTAC’s Midsize Sedan Deathwatch. The midsize sedan as we know it — “midsizedus sedanicus” in the original latin — isn’t going anywhere any time soon, but the ongoing sales contraction will result in a reduction of mainstream intermediate sedans in the U.S. market.

How do we know? It already has.

But Volkswagen’s May struggles were by no means unique to Volkswagen.

Aside from the Honda Accord, which led the category thanks to a 5-percent increase to 33,547 sales in May, every nameplate in the midsize segment generated fewer sales in May 2017 than in May 2016.

Accord excluded, the other midsize cars combined to lose 27,000 sales, a 16.5-percent decline.

Passenger cars overall were down “just” 10 percent last month.

Double-digit percentage losses were reported by the Toyota Camry, Nissan Altima, Ford Fusion, Chevrolet Malibu, Hyundai Sonata, aforementioned Passat, Subaru Legacy, Mazda 6, Chrysler 200, Buick Regal, and Volkswagen CC.

Only the Accord and Kia Optima — the latter down only 1 percent — escaped the market’s sharp turn against midsize cars.

For the Chrysler 200, the 62-percent drop was predictable. Chrysler 200 sales fell 62 percent in April, as well. The 200’s discontinuation was announced more than a year ago.

The Mazda 6’s 46-percent drop was the harshest among the segment’s continuing cars. Mazda wasn’t a top-tier player at this time last year, nor even a mid-pack player, but the 6’s May 2017 market share plunged to 1.6 percent (from 2.5 percent in May 2016). That was less than half the sales managed by the Subaru Legacy. Nevertheless, Mazda is convinced that there’s a future for the Mazda 6, and is therefore presumably a believer in the segment overall.

Toyota is, too. Granted, the stature of the Camry, set to launch in all-new form for the 2018 model year this summer, is on a different level altogether. But Toyota’s Bob Carter, executive vice president for sales in North America, says the segment could level off.

“We’re gonna start to see a plateau,” Carter told the Dallas News, “and, who knows, maybe a little bit of growth.”

Volkswagen Atlas Production Chattanooga, Image: Volkswagen

But does that plateau have room for everyone? Already we’ve seen the disappearance of numerous midsize players. As SUVs/crossovers such as the Volkswagen Atlas take over the market — and factories — will there be space for 10 or more midsize sedans?

The leaders are ever more the leaders. 52 percent of the midsize cars sold in America so far this year were Camrys, Accords, and Altimas, up from 48 percent a year ago and 45 percent two years ago.

Timothy Cain is a contributing analyst at The Truth About Cars and and the founder and former editor of Follow on Twitter @timcaincars.

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23 Comments on “Midsize Sedan Deathwatch #12: Is That An Atlas Intruding Into Your Territory?...”

  • avatar

    You could see more sedans morph into wagons and hatchbacks, like the new Regal. As was noted in the compact segment, hatchback sales are up while sedan sales are down.

    • 0 avatar
      Sam Hell Jr

      In addition to the upward pressure from compact hatches, I suspect (and hope) that there will be a trickle-down hatch effect into midsize sedans from the Model S and some other ostensibly desireable five-door Big Money cars like the Panamera.

      If there is one good thing about CUVs, it’s getting American auto buyers used to the idea that a liftback isn’t some low-rent Euro-weenie affectation.

      • 0 avatar

        Totally agree. It’s not all doom and gloom. This too shall pass. In 5 years, people will start wondering, “hey, you know what would be cool? A low to the ground sport CUV!”, and then we’re right back to wagons. I think we’re screwed on the stick shift though. They are too slow to make a comeback.

  • avatar

    Already saw one on the road!

  • avatar

    Haven’t driven one, but it is the full size car Muricans expect. They are about ten years late, but it is a very nice truck, and well thought out for the target market of family with soccer team, scout troop or other school group to tote around. They should sell a lot of these.

  • avatar

    Nice plug for the overpriced Atlas. The majority of vehicles I see are still CUV, midsize cars, or compact cars, in equal portions. I rarely see a new VW. Around here VW dealers don’t deal. I once considered a Passat but the dealers wouldn’t come off sticker & VW had no rebate offers. Even today there is still no rebate on the slowww selling Passat.

    I can get a $6K rebate on a loaded Sonata which I’d grab in a heartbeat before I’d consider a Passat.

    • 0 avatar
      Dave M.

      You’re not trying hard enough. Here in Houston Passat’s are routinely $3-7k off msrp. I wouldn’t expect that on the Atlas anytime soon though.

      I’m even looking at a Golf as my daughter’s first car – all the safety bells and whistles for right around $20k in the Wolfsburg.

  • avatar

    They are offering the best bumper to bumper warranty in the industry on the Atlas and New Tiguan.

  • avatar
    Kyree S. Williams

    The Atlas costs way more than the Passat. The Atlas’s base price is above $30K. You can get a nice Passat for well under that, especially when the Passat sees reasonable discounts, and the Atlas is so new that dealers will want every bit of the MSRP.

    The Passat has more to fear from an enlarged Tiguan (VW is only selling the long-wheelbase version here, which will make it one of the roomiest compact crossovers on the market)…and the chance that the next Jetta will be Civic-ified (in other words, the Jetta could become 85% of its mid-sized Passat counterpart in size and content for considerably less money).

    • 0 avatar

      Both of these things are true. It’s also important to remember that the Passat, like most other midsize mainstreamers, is ancient. It will have a very tough fight against all the new metal in VW showrooms, as well as the…. 5?…. years of identical used Passat inventory out back.

      VW needs to consolidate. Let the Jetta take over the current Jetta + Passat’s role, and let the Passat move up into the CC’s space in terms of design, quality and dynamics. I guess with the CC replacement coming they could just cancel the Passat.

    • 0 avatar

      If I played armchair auto exec for a few minutes…scratch the “if”, that’s exactly what I will do…I would say that the play here is to design and market cars as sporty and fast and CUV’s as roomy and adventurous, across the board. VW is particularly well suited to this strategy. Consolidate Passat and CC into one sporty four door coupe model with 4Motion, paddle shifters, and some available horsepower. Do the same with Jetta/Golf/GTI – make the cars sportier than the competition. Push the family buyers looking for safety and space into the CUV lineup and offer the full range so they can buy whatever CUV they can afford. They need a CUV smaller than the new Tiguan to execute this strategy. Kill the Toureg as that competes with Audi needlessly. Kill the Golf AllTrack as that competes with the CUV lineup needlessly. I don’t know what to do about the damn Beetle. Does anyone even buy them anymore?

  • avatar

    Wasn’t the Passat refreshed about a year or two ago? I’m guessing this was not a wise investment of several hundred million dollars. I know I can’t tell the difference between a 2017 and the older models. From what I have read, the best part of a new Passat is the 1.8 turbo engine.

  • avatar

    I was doing recall on Mazda3 today. Talked to salesman about Mazda6. He said, I would get $500 loyalty. I was about to go like… “dude. If I don’t buy one, nobody will”

  • avatar

    I’m surprised no one has turned their mid size sedan into an outback competitor. Why can’t Ford offer an elevated fusion station wagon? Why didn’t Chrysler try a 200 outback competitor?

    • 0 avatar
      Sam Hell Jr

      Because all those development dollars can be sunk more profitably into the existing CUV line. And because it turned out that, just as no one wanted a Wrangler substitute, nobody seemed to want an Outback substitute.

      • 0 avatar

        But nobody ever actually made one. The various supposed copies (Alltrack, Venza, Crosstour as well as the upcoming Buick TourX) lacked the ground clearance and off-road capability of an Outback and are/were generally a lot more money. The closest thing right now is probably a Volvo V90, but it’s roughly double the cost of a typical Outback.

  • avatar

    Good points on the Passat getting eaten alive by a combo of the next generation Jetta and Tiguan.

    The one niche VW could probably tackle with the next gen, MQB based Passat is to Subaruize it and sell the Passat Alltrak. That would likely sell well.

  • avatar

    When do we get to the CUV shark jump, when Marge and every soccer mom realizes their breadbox doesn’t let them see over traffic any more because everyone has one?

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