VW's U.S. Sales Zoom; Shifts Gears Globally

Though they still lag behind Japanese automakers in J.D. Power polls measuring U.S. consumers’ perceptions of dependability, Detroit’s Big Three are said to be “on a roll, thanks to new products and improved quality.” But there’s a reconstituted “bug” in their soup in the form of Volkswagen, which has made no secret of its ambitious Group Strategy 2018 plan to increase sales, improve customer satisfaction, improve ROI and add jobs worldwide with a “first class team.” More specifically, it has a goal of more than doubling sales in the U.S. to 800,000 (make that one million if you throw in Audi) by that time. 



“A couple of years ago, the goal looked like a pipe dream,” Detroit Free-Press columnist Mark Phelan writes. But after sitting down for dinner with VW of America president and CEO Jonathan Browning last week and analyzing the trends for the new Passat midsize sedan and the Jetta compact sedan, he seems to buy into the premise that reaching at least 800,000 is entirely doable. 

One reason is that VW has finally abandoned a decades-long practice of “ trying to convince Americans to buy cars engineered and priced for European tastes,” Phelan observes. It has reduced Jetta prices to compete with the likes of the Honda Civic and the new Passat is going after the Ford Fusion and Toyota Camry crowd.

“The next step will be moving VW's crossovers from the fringes to the center of their segments, to compete with Chevrolet, Ford, Honda and Toyota,” writes Phelan, who reports that the next-generation Tiguan small crossover should be reworked to compete against models such as the Chevrolet Equinox, Ford Escape and Honda CR-V.

And, says Browning, "I'd really like to add a family-carrying crossover" that would go up against vehicles such as the Honda Pilot, Chevrolet Traverse and Ford Explorer.

On Friday, VW of America reported 38,657 units sold in May -- a 28.4% increase over prior year sales and a 35.7% increase year-to-date. It was its best May since 1973, according to a company press release. 

But the U.S. is only part of a much larger pie that VW has set its strategic vision upon, and Volkswagen AG CEO Martin Winterkorn made some announcements over the weekend that are intended to further his out-there agenda to become the No. 1 global automaker.

He “appointed a new trucks chief, added a top executive for China and replaced three Audi board members as part of a shakeup to push forward with his growth plans,” reportBloomberg’s Alex Webb and Ola Kinnander. The intent is to strengthen VW’s strategic focus to expanding sales in China, while reshuffling the leadership of its truck business.

"This fundamental reorganization is the right response to the increasing challenges,” according to Winterkorn, as quoted by Lijee Philip in The Economic Times of India. “At the same time, we are laying the foundations for keeping the Group and its brands on their successful course even in a difficult market environment.”

VW sold 2.3 million cars in China last year, resulting in a €2.6 billion operating profit, according to the Associated Press. Commercial vehicles, meanwhile, have become VW’s “second strong pillar” and the further structuring of its function in the group board of management under the leadership of Leif Oestling “now paves the way for close co-operation between the MAN, Scania and Volkswagen commercial vehicles brands to leverage synergies and jointly harness the substantial worldwide growth potential,” Philip writes. 

Oestling, who has run Scania for 23 years, will join VW’s management board.

Ulf Berkenhagen, the purchasing chief at Audi, is becoming procurement chief at MAN and will be replaced by Bernd Martens, who currently works in VW purchasing. Audi is also replacing development head Michael Dick with Bentley chief Wolfgang Duerheimer, and VW brand marketing head Luca de Meo takes over for departing sales chief Peter Schwarzenbauer. VW commercial-vehicles chief Wolfgang Schreiber moves to Bentley to replace Duerheimer. All changes take effect Sept. 1.

Three new executions in VW’s “See Film Differently” campaign -– this time featuring pseudo scenes from “Silence of the Lamb,” “Jaws,” and “Taxi Driver” -- were positively reviewed in both Adweek and Ad Age recently, with the latter calling them “hilarious” in its “Creativity Pick of the Day” feature.

“The look and feel of each film is faithfully reproduced, and period touches add to the fun,” writes David Gianatasio in an Adweek “Adfreak” column. “Note the shaggy haircut and T-shirt/gym-shorts ensemble that dude sports in the ‘Jaws’ spot. We all looked like that in '75. I still do.”

But VW, apparently, has grown up. It doesn’t look anything like it did in ’75. Or even ’05, for that matter. It remains to be seen if it will be in top hat and spats in a half-dozen years, however.

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