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September 7, 2012

News & Features

Volkswagen amps its focus on U.S. market

Detroit Free Press

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A VW Golf is shown in a storage and loading tower at Autostadt in Wolfsburg, Germany. (Joerg Sarbach / The Associated Press)

Volkswagen is planning to step up its presence in the crossover-SUV market in a big way as the automaker attempts to elbow its way into the mainstream of the U.S. car market. VW is in the early stages of an ambitious plan to boost its American car sales from 324,400 last year to 800,000 by 2018.

"We need a core of products to drive our volume," says VW of America President and CEO Jonathan Browning.

A couple years ago, the goal looked like a pipe dream. A couple of strong new cars changed that. Sales of the Jetta compact sedan soared 54.5 percent last year to 150,513. After just a few months in production, the new Passat midsize sedan is selling so well that VW hired 1,000 people at its new U.S. assembly plant, a move that will raise its capacity to 170,000-180,000 cars a year. Further refinements at the plant are expected to increase its output to 250,000 Passats annually.

After decades of trying to convince Americans to buy cars engineered and priced for European tastes, VW aimed its latest models at the heart of the American car market. It reduced Jetta prices to compete with popular models like the Honda Civic. The new Passat's size and price pit it squarely against favorites like the Ford Fusion and Toyota Camry.

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.

The next-generation Tiguan small crossover will likely be reworked in size, price and features to take on models like the Chevrolet Equinox, Ford Escape and Honda CR-V.
"We have lots of room for growth in the Tiguan's segment," Browning says. "It could become the third leg of our volume, along with the Jetta and Passat."

VW sold just 25,990 Tiguans last year. The next Tiguan is widely expected to be the second vehicle from VW's Chattanooga, Tenn., assembly plant, raising the company's U.S. production to as many as 500,000 vehicles a year.

Browning has his sights set on a larger crossover, too, a vehicle between the Tiguan and the premium-priced Touareg.

"I'd really like to add a family-carrying crossover," he says. Larger than the Tiguan, probably with three rows of seats, it would compete with vehicles such as the Honda Pilot, Chevrolet Traverse and Ford Explorer.

VW's outstanding diesels will lead the brand's play for environment- and fuel-economy-minded buyers. Look for a TDI diesel version of just about every vehicle the brand sells. VW also will offer some gasoline-electric hybrids, but its heart belongs to the TDI diesels.
About 20 percent of Passats, 23 percent of Jetta sedans and 70 percent of Jetta station wagons sold are diesels, all of them boasting highway fuel economy ratings of 40 mpg or more.

Volkswagen builds a huge variety of vehicles around the world, everything from minicars to limousines. Don't expect Browning to load up at the buffet table, though.

"My job is not to be a kid in the candy shop," he says, but to show restraint and concentrate on vehicles American buyers will buy in meaningful numbers.

That means you can forget about the tiny Up city car that just went on sale in Europe.

There's no decision yet on whether to sell the next generation of the Polo subcompact in the U.S.

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