Might VW pull out of the US market if they can't right their financial ship?BusinessWeek has an interesting article on VW and their state of affairs here in America, and it's not very rosy.
"But there's only so long any management can put up with nearly $1 billion annual losses. Says one executive close to VW: "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."
I can't imagine the American car market without a Volkswagen presence. It would almost be like having Chrysler disappear (which still might happen!)...
Full story here.
Somewhat related story here: VW is working on updating their logo.
sabastian says:
05:17 AM, 07/19/07
Is it just me or does it seem like every car maker is floundering in the U.S. market? Ford, GM, Chrysler, Nissan a while back, and now VW. Is no one buying cars anymore? Oh wait. They're all buying a Toyota.
rsholland says:
05:41 AM, 07/19/07
And Hondas.
navigator89 says:
06:01 AM, 07/19/07
Wow this is news to me. I didnt know they were in trouble in the first place!
But the only way for them to get more sales and profits is by lowering their prices. For example the Passat is a midsize car but is priced way out of its league in the luxury car territory. Volkswagen aren't simple cars like they used to be, they're trying to be like Audis but the dont carry the same badge. All their cars have good styling and materials but the high prices are hurting. The Jetta is Corolla sized but has Camry prices, the Touareg should be an Explorer competitor but instead it chases X5s, MDXs.
The Phaeton is a prime example of this. It was a great car but too heavy and expensive and it didnt carry the prestige of the Audi, BMW or Benz. As a result it bit the dust.
If VW could fix their poor reliability that too would help a lot...
crowb says:
07:47 AM, 07/19/07
Navigator89,
I share your pain. I've always been intrigued by the VW styling and presentation of their product, but they just don't seem to "get" the U.S. market. Their prices are too high and their quality has been off for some time. They don't seem to incorporate the most up to date methods and materials in some cases either. Example, still using iron block engines and steel instead of aluminum in the construction of the car. The cars are too heavy, like you said, and they just aren't priced where they should be to be competitive.
I've also heard a lot of anecdotal evidence that VW dealerships are snooty and unaccomodating. That's probably different for every dealer in every region. I know the one in our area is pretty haughty though. My wife test drove an '06 New Beetle Convertible in december of last year. They had a bogus $800 "dealer prep" mark up on the MSRP to start off. They didn't want to budge on the price despite having 8 of that model on the lot so late in 2006, and the car's convertible top broke while we were on the test drive with only 26 miles on the odometer. The dealer offered no explanation and didn't even attempt damage control. And still they were barely willing to come down off of MSRP. When they did they tried to make the money back with higher interest rates and such. Needless to say we didn't buy the car, and if that experience is common for other buyers, its no wonder I don't see more VWs on the road in my area.
Despite all that, I still like the idea of a VW. But I could never convince myself to buy one unless I had money to burn.
ateixeira says:
08:14 AM, 07/19/07
This all goes back to Piech and his giant Ego.
Let's face it, in one way or another he's been controlling VW for a long time.
He saw Mercedes-Benz go after the Golf market with their A-class, and wanted to counter-punch by taking VW ... upscale?!
He seemed to forget that was Audi's job.
Fact is, a premium priced VW makes no sense when you're also trying to sell Audis. Their costs skyrocketed. How can you make a profit when your factories look like designer stores? How can you expect a VW dealer to sell and service a full blown luxury car like the Phaeton?
They are trying to take a step back while saving face, but the fact is VW was not able to compete profitably with the way their cars are currently positioned (premium price in each segment).
VW needs to cut costs. They should hire Ghosn to replace Piech. Get the Polo to affordable levels and bring it here. Bring a Polo GTI to compete as an affordable hot hatch. They're already planning a cheaper-to-build Golf VI. Do the same for the Passat, too.
Ditch the Phaeton and the Passat Plus/4 door coupe idea. VW should have 90% of its vehicles priced below $30k, right in the mainstream.
carlisimo says:
08:28 AM, 07/19/07
I see the same thing happening to VW as happened to the French, and Alfa Romeo. Way, way too many build & design issues, a hard time getting them fixed, and word of mouth. A lot of people are scared of owning one... and it's not like they're cheap to make up for it.
A few years of unreliability gets forgotten, but not several. They also have a pretty narrow model mix... I think it's strange that Audi seems to have a wider lineup.
kurtamaxxxguy says:
09:20 AM, 07/19/07
A new _logo_ ? VW keeps selling sizzle but not the Steak!
Why does VW AG keep strangling, or ignoring, imports of models enthusiasts and customers clamor for? A revised minivan, R32, Sirocco, and GTI's with interiors other than coal bin black would all be helpful.
Meanwhile, VW AG dealerships I've visited are rude or non-existent (Portland OR has __one__ Audi dealer .vs. 5 VW dealers, etc.). Do they really think arrogance sells cars?,
Perhaps VW AG should bite the bullet and fold their USA division into AUDI USA, given that Audi understands what USA Euro-buyers want and (like Porsche) _will_ pay for? Now imagine the best of those VW dealers as Audi dealers, brimming with VW assets refined into new prestigious and expensive Luxo_Performance Audis (along with a 650 HP Audi S3, more powerful R8's, RS4's, etc ! ). Would VW arrogance be a problem here? I don't think so. The only problem will be where one can truly utilize Audi's street legal race cars.
desmolicious says:
10:24 AM, 07/19/07
My very recent experience, as well as that of family and friends, experience with VW absolute lack of reliability makes this not surprising. My Golf 1.8T's reliability woes began within the first few miles of leaving the dealership. Having to book service appointments for warranty work weeks in advance because they're flooded with other warranty issues is another indicator. Showing up at the dealership to drop said car off, and seeing the anger on the faces of other owners with the same experience sealed the deal. Never again.
And now they want to sell that top line Golf for over $30K? Good riddance.
iskch says:
11:52 AM, 07/19/07
I've been a VW owner in the past. Here in Oklahoma City we have just one stincky dealership. I was on the market for a 2006 VW GTI and the dealer have no desire to work on my request and want me to put a down payment. What VW needs like on my area is another VW dealer. They have a large array of cars worldwide that they can incorporate in the USA market. Where is the advertisement of "solid german handling" characteristics that only publications will post?
Now, Audi has completly overshadow VW. Example: we got the stupid thing with new limited R32's sales. Huhmm... Get an A3 w/V-6 and presto!
Also, they want to forget their roots with their air cooled engines. Subaru doesn't. Killing the bus project and getting a boring Chrysler minivan! Hey, VW, remember the Scion XB? How cool is the VW bus that even Carl's Junior featured in a commercial for their burgers.
Quality is another issue that they are working on. Maybe too late for many people that are already dropping the barnd from their choices.
estreka says:
01:54 PM, 07/19/07
VW has already become a niché brand. That niché is becoming smaller and smaller each passing year because of aforementioned issues: quality, customer service, reliability, and especially price.
The only people who still buy VWs are the hardcore enthusiasts (and people who just can't get enough of the Beetle).
You can't drive around in a "People's Car" and expect to be considered afluent. I don't care how much you paid for it.
hondacura4 says:
04:45 PM, 07/19/07
My younger brother bought and serviced his former 1.8 GTi here at a BMW-VW dealer. He took it in to get the window issue fixed, the techs left the car out of gear and it slowly rolled down a slight incline and hit 2 brand new 530i's. Even worse..... if those 2 Bimmers werent there it would have ended up on the expressway.
The good part is that when he decided to get rid of the car that same dealer gave him an excellent deal on a 2002 330i Sport.
harrychezt says:
11:05 PM, 07/19/07
Besides Toyota, Honda, Nissan, Mazda.....
Hyundai is on mark to sell over 500,000 units this year( think last month, they sold nearly 50,000 units in one month, a record, so far) Kia over 300,000, BMW over 300,000(again this year).
Even Suzuki is enjoying record sales for the 2nd or 3rd year in a row(albeit, small amount of sales vs others)
Anyhow... all this adds up to some people not visiting VW, and making purchases.
We looked @ the new Rabbit last July when it came out, and with everything we would want, it would be around 21K msrp( at Hyundai/Kia, this money buys Alot of car, with better MPG, for less than this.. Elantra, Spectra, Sonata I-4 and Optima I-4 get better MPG than the Rabbit, and a larger cars, for example).
If the Jetta were 16-21 K msrp, like many other makers have larger-than-Rabbit, in this price range(and usually better MPG, too, and longer warranties, even some at GM and Ford, now, and Mitsubishi and Suzuki), Price is a big factor in what people buy; what you get for what you pay.
Price is what keeps us from considering a VW.
Maybe the bluetec diesel Jetta may be a good deal next year?
Who knows?
VW has shown on tv commercials 3 cars for under 20K(usually starting at 16K msrp)....Beetle, Jetta and Rabbit( albeit, w/o any sunroof, which is a BIG Option deal these days, and other extras).
The Jetta we saw was 23K last Summer, that we would like.
23K can buy me an Azera on sale( maybe less MPG...but a whole lot nicer car, as Edmunds Editors Choice for car between 25-30K...for 07...).
There are just so many choices anymore, VW had better do something, and quick!
Maybe they should build cars in China, and ship them over? Then they may have price advantages again in USA?
Take Care/Not Offense.
desmolicious says:
01:15 PM, 07/20/07
Building them in China would make a lot of sense, as then they really would be the people's car...
estreka says:
01:43 PM, 07/20/07
I can't believe I'm saying this, but I think even VW's quality would suffer if they built in China.
bbechtel16 says:
07:32 PM, 07/20/07
I think if they fixed the reliability, dealer network, and pricing they would be fine. Not that that's an easy overnight task. They are nice cars I think/guess. Solid feeling, luxurious, very Germanesque, dare I call it a poor man's BMW (hey they called my Sentra SE w/ PP a poor man's BMW in one article)?
desmolicious says:
03:45 PM, 07/22/07
nope, they're a poor man's Audi. BMW does not dabble with front wheel drive (ok who said MINI?) ;)
swap_mysleeper says:
09:50 PM, 07/24/07
you remember when your mom used to tell you don't do this or something WILL hapen, then you would still do it?
that's what vw reminds me of only I watched my friends at mecanic school do the experience...
at the start of my study 4-5 of them bought a Volks thinking that they will overhaul it on school time, bragging about being able to fix it .. for how long?
one volks is still in a garage being rebilt ( yeah the dummie took EVERYTHING APART AND GAVE UP HALF WAY ON THE ENGINE AS IT NEEDED TOO MANY SPECIAL TOOLS FROM THE DEALER DOWN THE STREET....
an other bought the car of the other to have spare parts as his golf was having more problems than a quater back does when he trains fighting dogs...
an other swaped a VR6 in an talked about it for 8 months before the main bearings welded on the crankshaft ( turns out VR6s are a total beast at low rev but the oil pump can't handle high rpms at all so shift early you honda junkie) he swore he would redo the engine then trade it for a civic......( not a brighter move.....)
the last guy putted 2 Porsche carburators on a 2.0l it worked really well but a part of it comes probably because he's always tearing a part of the engine to clean something ( deglaze the cylinders, clean the engine head, change the connecting rod bearing) basickly he's overhaulin the engine piece by piece every year
conclusion ( I know people will throw rocks at me...)
good driving feel and precision has a price, in the case of VW it is reliability and weight . lots of people buy volks because it's as cheap as it can get to drive german, but having to walk with that friend in the dealer half the time to get a special tool for parts that are made to wear out is what discourage me from starting a tool box for a volks
i would like to buy a 2000-2005 jetta ( MK4??) but it would be knowing that it would be out of my driveway by the next 3 years
bbechtel16 says:
06:42 AM, 07/25/07
Very true desmolicious. How about a VERY poor man's BMW? I understand the big difference in handling dynamics there. You can definitely tell they come from the same country though.
Very sad to hear those VW woes swap_mysleeper. Are they this unreliable in Germany too? I can't imagine them putting up with it. Though are any German vehicles regarded as reliable?
kurtamaxxxguy says:
11:42 AM, 07/25/07
VW announced today (7/25) plans to build cars in China to sell into the USA. Shanghai Volkswagen will be taking responsibility for exterior and interior styling of that next-gen Passat, first to be sold in China and eventually here. Exact timeframe of introduction here is unknown, but China will get the redesigned car first.
VW claimed Chinese and American "tastes" are similar, save for a few small differences they did not define.
Will USA Euro enthusiasts take to a VW built in China?
08lr3 says:
03:40 AM, 09/10/07
thought of recent announcement of VW moving HQ to VA? and cutting jobs.
puristsoul says:
02:50 AM, 10/ 5/07
All they have to do is read this little blog and address the issues mentioned here. Namely, reliability and coming downmarket-not competing with Audi, that is. I hope the management reads these blogs and takes note. Being half German I am perplexed as to why the quality is not on par with Toyota. Germans are sticklers to details too. Too bad they also tend to be a little dense and don't see the obvious solution until it's spelled out in front. Luckily, for me my other half can see this.