Forget Volkswagen's '800,000 Sales by 2018' Goal - VW's New Goal Is 5 Percent U.S. Market Share by 2020
In 2009, during the depths of a global financial crisis the likes of which generations had never seen, Volkswagen of America set forth on a nine-year plan that would more than triple sales to 800,000 units in 2018.
Stuff happened. A crisis (or two) got in the way. An overly Americanized product lineup lacking in utility vehicles underachieved. Volkswagen lost its right to sell diesel models in America. Volkswagen will struggle to sell 400,000 new vehicles in the United States in 2018.
Although at first it seemed possible — Volkswagen sales grew far faster than the market as a whole exiting the recession — the 800,000-unit sales goal has long since been abandoned. By 2014, before the diesel emissions scandal even broke, now-departed Volkswagen of America CEO Michael Horn was questioning the timing of the 800,000-sales goal.
As the summer of 2017 approaches a close, however, Volkswagen’s global boss Herbert Diess has a new, seemingly unrealistic goal for the brand’s U.S. operations, Bloomberg reports. With a stronger SUV lineup, Volkswagen wants to grow its U.S. market share to 5 percent in 2020.
Volkswagen’s market share in 2017? Less than 2 percent.
Interestingly, 5 percent market share in the United States equals somewhere between 750,000 and 900,000 sales, depending on the strength of the market. In 2015, for example, Jeep claimed 5 percent market share with 872,908 sales. Jeep then grabbed 5.3 percent of 2016’s market with 926,376 sales. Through 2017’s first seven months, roughly 500,000 sales would be required for 5 percent market share.
Volkswagen sold 188,329 vehicles during 2017’s first seven months.
Of course, we’ve yet to see the real impact of Volkswagen’s new SUV strategy. Gone is a utility vehicle lineup that included the undersized Tiguan and outlandishly priced Touareg. The Touareg is discontinued in the U.S. market after the 2017 model year.
The first-gen Tiguan becomes the decontented, lower-priced, subcompact crossover-competing Tiguan Limited. In comes the all-new second-generation Tiguan with far more space and an available third row. That Tiguan serves as a follow-up to the properly large first-gen Atlas, Volkswagen’s first true competitor for the Ford Explorer and Toyota Highlander.
Yet on Volkswagen’s quest to add 2.5 times more market share over the next three years, the brand’s plan does not include the T-Roc — a true rival for the Honda HR-V, Buick Encore, and Jeep Renegade. While the U.S. market earns more than 40 percent of its sales from the SUV/crossover sector, Volkswagen currently produces only 14 percent of its U.S. sales from utility vehicles, a figure Herbert Diess expects to skyrocket in the next few years. Globally, Diess wants 40 percent of global Volkswagen sales to be SUV-derived.
There will be a new version of the Jetta, still Volkswagen’s best seller, next year. Volkswagen isn’t so foolish as to think the current-sized lineup will be sufficient to grow market share to 5 percent. But regardless of the size of the lineup, the number of SUVs, the affordability of cars, and the number of electric offerings, this level of growth would be a stunning achievement if actually accomplished.
Volkswagen has failed to do so in the past. It’s difficult to believe the company can do so now.
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