VW has a history of highs and lows here in the states. During their last crisis in the mid to late 90’s, Volkswagen redesigned their flagship vehicle, the Beetle. The good news was that it caught on and re-established itself with solid sales. This, along with modest gains in the Jetta’s acceptance, helped VW regain a profitable foothold.
But the company has come across hard times once again. Sales have been declining an average of 25,000 units a year for the past four years. In 2002, Volkswagen sold 338,000 vehicles. Last year, it sold just 235,000. And this has been particularly frustrating for them due to the fact they lead the European car market with a 20.3% share.
Volkswagen models are known for attractive styling, upgraded interiors, good fuel economy with lively engines, and agile driving performance. But apparently, this hasn’t been good enough for stateside car buyers.
One of the biggest problems has been price. Due to the strength of the Euro, VW’s costs are higher than its competitors, even when factoring in those vehicles assembled in Mexico.
Another problem are inconsistent quality ratings. J.D. Power, for example, rates VW in the lower 20% for reliability, quality, and service. The growing number of car buyers who do internet research see this information and back off.
So, what’s Volkswagen to do?
They’ve announced two major steps recently. First, they’re going to begin assembling vehicles in China for the U.S. market in an effort to close the cost gap.
Second, they’re bringing in Stefan Jacoby, highly touted for growing VW’s market share in Europe. He’s been given the task of breaking even by 2009. If not, the next move by Volkswagen may be “auf wiedersehen” (goodbye).
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Joshua Rose is an Auto Broker who buys Used Volkswagens, as well as other makes, at Dealer-Only auctions on behalf of consumers. He also provides tips and information on Public Car Auctions for car buyers who’d like to do this for themselves.
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