Volkswagen targets mainstream America

Dan Carney • E-mail

Volkswagen has ambitious plans to directly challenge Toyota — and a cornerstone of the plan for global expansion is to boost sales in the U.S. by building products with more American flavor. 

The plan calls for the company to grow from 6.2 million sales worldwide in 2008 to 10 million cars by 2018, with American sales climbing to 800,000 cars a year.

To accomplish this, VW hopes to expand the appeal of products outside its current base of European car enthusiasts, attracting more of the shoppers who reflexively buy Toyota Camrys and Honda Accords today.

This means making cars that are bigger, but less expensive than today’s models, and expanding the model line into additional segments, such as seven-passenger crossover SUVs, where the company does not participate today, said Stephan Jacoby, president of Volkswagen Group of America.

“We believe that the brand has a fantastic foundation to grow into segments where we are not present right now and where we are not competitive right now,” he said.

VW said it will be building more of its models in the NAFTA trade zone, with an emphasis on U.S. production, he said.  The company plans on assembling the cars in its new Chattanooga, Tenn. plant beginning in 2011. It also plans on building 85 percent of the vehicles in North American.

“We want to have U.S. suppliers, we want to be local here, we want to be good citizens, and we want to understand the market better than we do today,” said Jacoby.

This means that the company’s suppliers can be located close by the assembly plants, cutting transportation costs, simplifying logistics and insulating Volkswagen from currency fluctuations. “That is the key to offering a VW at a price that is competitive against mainstream American and Asian competitors,” Jacoby observed.

The company has already announced plans to build a mid-sized family sedan in the Chattanooga plant and to build a larger compact replacement for today’s Jetta model. The unnamed mid-size car will sell alongside the Passat, which will continue to be imported for those buyers who want their German engineering straight up, not diluted with the extra elbow room and Americanized amenities of the new models.

Today’s Volkswagens have unorthodox design features on sunroofs and seat recliners — differences which appeal to the sense of individualism in VW’s core enthusiasts but which result in lower J.D. Power quality score from newcomers to the brand who are confused by their operation.

VW’s adopt to the industry-standard approach to such controls for new mainstream models, said Jacoby.  But he adamantly insists that such future models will nonetheless retain their Teutonic feel. “The new cars will be tailor-made for this market, while still being Volkswagens in their essence,” he declared.

Some observers are skeptical that it is possible to attract new customers by making Volkswagens more like Toyotas without losing the characteristics that appeal to current customers.  “Lowering the costs will certainly make them more attractive, but at what cost to current VW fans?” asked Jon Linkov, managing editor for autos at Consumer Reports. “Making a Jetta more Camry/Accord like will certainly not make the repeat VW buyer happy, I feel, and I don’t know if they will be able to cover those losses and bring in more people.”

Volkswagen seems determined to rip a page from Honda’s playbook, unabashedly describing its plans to simplify its option lists into “Honda-like” trim levels with no factory-installed options, as well as adding new models such as the crossover three-row SUV described with the shorthand label, “Honda Pilot fighter.”

The company will also exploit its legendary image among small car buyers to join the minicar segment, with a larger, Americanized version of the next generation edition of the popular Polo minicar currently sold in Europe.

The company also plans to remain in the minivan market, where customers are largely unaware, or unconcerned, that the company sources its “German engineered” minivan from Chrysler LLC. While the minivan market has collapsed to half its previous sales level, minivan customers rate highly in loyalty and they are sufficiently pleased with the Routan for the van to rank second in the latest J.D. Power customer satisfaction survey. 

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