Volkswagen to Unveil Newest SUV in Push for U.S. Market Share
Volkswagen (VLKAY) is months away from introducing a new SUV for the U.S., specially designed for American customers in an effort to increase its U.S. market share. The German car company also plans to build electric vehicles and hybrids in North America in the next few years.
The new SUV has even been named, although that is being withheld until the formal introduction in November, said Hinrich Woebcken, who took over as head of the automaker's North American operations in April.
Production on this newest SUV will be at the automaker's Chattanooga, Tenn., assembly plant starting in December.
The SUV and production of alternative vehicles are two of several plans to step up the German automaker's performance in the U.S., a market where it had lagged for years in the wake of a diesel emissions cheating scandal. The automaker has been engulfed in controversy since September, amid charges by the Environmental Protection Agency -- and VW's admission - that it had faked emission tests.
Woebcken has been meeting with VW's U.S. dealer network of more than 600 franchisees, who are upset with lost business, angry customers and millions of investment in new and upgraded stores that hasn't panned out.
"We need product momentum," said Woebcken, at a press conference in Chattanooga. VW showed a heavily camouflaged prototype of the new SUV. The assembly plant was shut down, amid a $900 million expansion announced 18 months ago. "We need higher volume of sales, but we also need halo products," that is, niche models that sell in small numbers while drawing disproportionate credit to VW.
When asked if VW might bring back a modern version of the VW Microbus that helped put the brand on the map in the 1960s and 1970s, Woebcken grinned and said, "I wouldn't rule it out."
Woebcken said VW has "a huge lineup and can Americanize them," which means the automaker must do a better job of conveying the tastes and demands of American customers to engineers in Germany. "We have to go more deeply," he said, to ensure the vehicles satisfy American customers, whose tastes and habits are different than those of Europeans.
Previous management wasn't successful communicating and convincing the home office to institute changes in cars designed for the U.S. For example, navigation in Europe lists the street name before the house number -- in the U.S. it's the opposite. The structure of VW's North American operations will be revised to better align with those in Germany, Woebcken said.
VW's Audi luxury division, which reports directly to Germany, has done well in the U.S., selling 96,934 vehicles through June, up 3.5% from a year ago. The mainstream VW brand has sold 149,014, down 14.6%, as sales of diesel vehicles were halted. The automaker is far off the pace of achieving 800,000 annual vehicle sales by 2018, a goal stated a few years ago.
Woebcken, a personable industrial engineer who was recruited from a German brake manufacturer, worked for a decade at BMW. He studied as a high school exchange student in Rochester, N.Y.
"I went to the senior prom and learned a lot about this country in my year here," he said.
Doron Levin is the host of "In the Driver Seat," broadcast on SiriusXM Insight 121, Saturday at noon, encore Sunday at 9 a.m.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.