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Stalling in U.S. Market, Volkswagen Seeks Traction With American Consumers

  • Why it matters

    Why it matters

    The situation for VW in the American market has deteriorated as sales have slumped and its reputation for quality has been bruised by a series of recalls.

  • Facts

    Facts

    • Volkswagen is losing U.S. market share with its Passat and Jetta brands and has nothing to compete with hot-selling SUV’s such as the Ford Explorer and the Toyota Highlander.
    • Automobile dealers are complaining that many driving features popular in other brands, such as rearview cameras and USB ports, are not offered on Volkswagens.
    • The company is investing $900 million in a new research and development plant in Tennessee, where rival vehicles will be reverse engineered to see why they are so popular.
  • Audio

    Audio

  • Pdf

vw tn dpa

 

Michael Horn undoubtedly knows Volkswagen Group better than America.

He’s spent 24 years at the company and was, among other things, responsible for sales and marketing in Europe, but with sales plummeting in the United States, he was named president and chief executive officer of the Volkswagen Group of America, Inc. He’s now responsible for turning around a brand that has lost its momentum since back-to-back years of solid American growth in 2011. The automaker’s dream of selling 800,000 vehicles in the U.S. by 2018 has morphed into a nightmare.

The situation in the United States has become critical in the past 15 months and shows no signs of abating. In July, for example, Volkswagen sold just over 10,000 Jetta sedans, its most popular model in America, which was a drop of 22.1 percent over the previous month, while sales of the Passat sedan dropped 33.6 percent to just 7,222 cars in the same time period.

The one bright spot was the GTI hatchback, which saw sales rise 65% to almost 2,000 cars. Yet even at the height of their sales, the Jetta and Passat never came close to dominating their sectors, while the Wolfsburg-based automaker has nothing to offer in the booming SUV category. Adding to the woes are problems with quality control, resulting in an embarrassing series of recalls, most recently of 150,000 Tiguans manufactured from 2009 through 2014. This followed a recall of 18,500 Routan minivans.

This is the situation Mr. Horn inherits from his predecessor, Jonathan Browning, who cited “personal reasons” for his resignation. He finds himself looking for clues to what American car buyers seek when they look for a new vehicle, a search Volkswagen has been on for decades.

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