Is Volkswagen Considering Pulling Out of The U.S. Market?

[Turk]

Is Volkswagen Considering Pulling Out of The U.S. Market?


For the past three years, Volkswagen's U.S. operations have lost $1 billion annually. VW has always been up and down in the US market. Before the Beetle was reintroduced 10 years ago, VW was in a similar crisis. Well now the company is having issues again as sales last year slid to 235,000 down from 338,000 in 2002.

Sales of the revised Jetta, Rabbit and Passat models have failed to spark in the U.S., which has forced some executives to discuss the possibility of leaving the US market all together.
According to Business Week, there are internal conversations that are suggesting that the automaker may eventually close its U.S. operations.
“For the first time in some time, the phrase ‘If we are to stay in the U.S.’ precedes a lot of conversations at VW.”
Many of VW's problems lie in the quality of their vehicles. Consumers now perceive the quality of VW's to be less than that of their Japanese competitors. J.D. Power and Associates Inc. ranks VW in the bottom 20% for reliability, quality and service. Many more consumers are paying attention to these ratings than ever before, so it is hurting VW.
In addition to the automaker's quality issues, there are issues with the current VW designs. The new models have been perceived as bland and straight copies from their Japanese competitors. One example is the new Jetta that looks a lot like the current Toyota Corolla. VW has lost their distinct quirkiness that separated them from their Japanese and American competitors. Rather than trying to remain different, VW has decided to kill such cool cars as the popular Microbus from the 60's and 70's that was supposed to be introduced. Instead VW has chosen to rebadge a Chrysler minivan. Also look what has happened to the VW Beetle. When it came back 10 years ago, everyone wanted one. Now ten years later it is an aged car that VW barely cares about anymore. VW has forgotten that the New Beetle saved them from extinction 10 years ago.
The one thing that could help VW is next year is the return of the TDI (diesel) engine in the U.S. It has recently been reported that there is growing interest in diesels in the US as consumers are realizing that hybrids do not achieve the gas mileage that many had hoped. So far Honda, VW and to some extent GM have been the main automakers that have announced plans for diesels in the US. VW and Honda will have them on the market some time next year.
Diesels will help, but they probably won't save the automaker. VW needs to address their quality and design issues before they can return to the black in the US. What do you think?
VW's situation in Europe is at the other end of the spectrum as the automaker is now the top selling automaker in Europe.
Full Story:
Business Week

[AVANTI R5]

It will never happen

[Rev1]

[Hazdaz]

Never gonna happen. If it takes another generation of two for them to work this sht out they will, but pulling out of the US would be a HUGE and costly affair.

VW needs:

1. improve their quality.
2. drop their damn prices - even if that means de-contenting their cars a little.
3. improve their styling.

Not small problems, but also not insurmountable ones either. Most of them stem from the fact taht they decided to go way too upscale in the current generation of their products thinking that customers would gladly pay $30k+ for a mid-sized car just because it has a German badge on it. That's what Audi is for - VW should be competing with Honda.

[BrysImpreza]

Originally Posted by Hazdaz

VW needs:

1. improve their quality.
2. drop their damn prices - even if that means de-contenting their cars a little.
3. improve their styling.

4. To Bring the Polo to the US Market
5. Keep up with demand for Diesels

[Layman]

Originally Posted by Hazdaz

Most of them stem from the fact taht they decided to go way too upscale in the current generation of their products thinking that customers would gladly pay $30k+ for a mid-sized car just because it has a German badge on it. That's what Audi is for - VW should be competing with Honda.

A Jetta is far less expensive than an Accord.

[blk_wrx]

Originally Posted by Layman

A Jetta is far less expensive than an Accord.

Jetta is not in the same class as the Accord... Passat is and its priced higher than it. VW has always been in No-Mans-Land,meaning always priced on the high-end of each class they compete in. With bad reliability its a tough sell.

[Hazdaz]

Originally Posted by Layman

A Jetta is far less expensive than an Accord.

Except that they aren't even in the same class. Even though the new Jetta is way bigger then the old one, it is more of a direct competitor to the Civic... the Passat is competing with the Accord.

Passat:
188.2" length
58" height
71.7" width

Accord:
191.1" length
57.2" height
71.6" width


Jetta:
179.3" length
57.4" height
70.1" width

Civic:
176.7" length
56.5" height
69" width

[Layman]

Originally Posted by blk_wrx

Jetta is not in the same class as the Accord...

Originally Posted by Hazdaz

Except that they aren't even in the same class.

Ah - got it. I wasn't thinking size specific, but rather appointment.

Either way, the price premium is worth it to me for the interior, style, and handling. But I can see where most people would go somewhere else - especially given the reliability perception.

[FNR32]

It won't happen. I'm not a VW fanboi, but it just won't happen. They will fix what they have to.

[All4bSpinnin]

they should market to lesbians....

[LastResort]

Originally Posted by All4bSpinnin

they should market lesbians....

Agreed. I'd buy a couple of Hot Beer Girls for 30k.

[Scoobyslack1]

A few years ago their quality issues kept me away from the TDI that I wanted.
I bought an xB instead, the Toyotas kill VW in quality/reliability.

[quentinberg007]

I think that is why they've been pushing the "3 VWs for under $17k" ads so much. They sell a great small car that is pretty luxurious and comfortable. Unfortunately, they didn't have a really cheap version to sell to the masses until recently. The weak US dollar is murdering them as well.

I can see the same problems coming up for BMW's MINI brand being built in the UK on the GBP that is worth nearly twice as much as the USD.

~~Quentin

[kdjstratton]

Originally Posted by quentinberg007

I think that is why they've been pushing the "3 VWs for under $17k" ads so much. They sell a great small car that is pretty luxurious and comfortable. Unfortunately, they didn't have a really cheap version to sell to the masses until recently. The weak US dollar is murdering them as well.

I can see the same problems coming up for BMW's MINI brand being built in the UK on the GBP that is worth nearly twice as much as the USD.

~~Quentin

You don't quite understand macro economics and monetary value, do you?

[LastResort]

Originally Posted by kdjstratton

You don't quite understand macro economics and monetary value, do you?

Please explain for us laymen. (no pun intended)

[quentinberg007]

Originally Posted by kdjstratton

You don't quite understand macro economics and monetary value, do you?

Please, explain. Show me the err of my thought process. Why is it not difficult to manufacture something in Europe and sell it in the US relative to doing manufacturing and sales in Europe? Being a niche market, like VW, would only amplify this problem, I'd think. You can afford the smaller profit margin if you are pushing a larger quantity of product. At the moment, VW sells relatively small numbers of cars in the US for little profit. Your other German brands in the US (BMW, Mercedes, Audi, and Porsche) have the luxury of being able to sell mostly expensive vehicles, which have larger profit margins. Is it just coincidence that they generally don't sell their cheaper models in the US?

~~Quentin

[naimouasta]

they can't do that. where i live i see old/new jetta's everywhere. 25% of them fanboys and 75% of them hot girls.

[LastResort]

Originally Posted by kdjstratton

You don't quite understand macro economics and monetary value, do you?

Originally Posted by LastResort

Please explain for us laymen. (no pun intended)

Originally Posted by quentinberg007

Please, explain. Show me the err of my thought process.

No explanation? I'm going to go with: "No fiving clue what I'm talking about"

[dankEe]

well jettas cost almost more than a accord in some ways..
i built a gti on their website a few weeks back and mine came out to 24gs, which is really expensive for a little hatchback

vw just needs to drop their price, and all will go back
- danny

[Lantec]

Originally Posted by dankEe

well jettas cost almost more than a accord in some ways..
i built a gti on their website a few weeks back and mine came out to 24gs, which is really expensive for a little hatchback

vw just needs to drop their price, and all will go back
- danny

Well VW has a lot more to offer than Honda and Toyota and Nissan etc etc.

I think people tend to put VW higher than the other makers, it's an intermediate between economy and luxury I think. their new passat is amazing inside and outside

[TCENGEL]

They should add more chrome to the Jetta! That'll do it.

[VWGrk1]

Regarding price, Americans do like "premium" products. There is a strong preference in many markets for a well-appointed smaller vehicle (i.e. Jetta or a Mini) versus a larger and less-premium vehicle.

Not saying that the price point isn't a bit high on these newer VW's. I think that the last generation, the MKIV generation, hit the mark much better in terms of curb appeal vs price.

Of course, the unexpected poor reliability of these vehicles drove off "premium" consumers. Plus VW kept that same lineup for too long w/o a restyle. Sort of like a domestic manufacturer.

[b4wantab]

I hope someone at SOA is paying attention to this. There is a lot that could be learned. Especially when the story references; push upscale, bland styling (even referenced Corolla), going more main stream (rather than remaining different...). The story does seem biased in it presentation though, so who knows.

I think the Beetle design is classic, never really thought it as dated. VW's do have great interiors. People used to pay a bit more for that because they felt premium. All the shop time has killed most of that with people I talk to. My brothers '98 GTI was bullet-proof, really a fun car to drive also. My sister's friend has a '01 Jetta that is junk and expensive. I was looking at a Jetta TDI when I bought my Legacy and the quality made me steer clear.

Peace,

Greg

[Kostamojen]

I think VW out-sold itself for a couple years and got too cocky. They needed to stay more of a niche player, but decided to go super-main stream and upscale which has killed them. Subaru is still trying to play the niche, and move up slowly in sales.