VW Names New U.S. Chief as Sales Slump Threatens Goals

Volkswagen AG (VOW), Europe’s largest automaker, appointed Michael Horn to oversee U.S. operations as a fall in sales undermines the company’s growth goals.

Horn, 51, will replace Jonathan Browning as head of Volkswagen Group of America effective Jan. 1, the Wolfsburg, Germany-based company said in a statement. Browning, 54, is leaving the German carmaker for “personal reasons” and returning to the U.K.

Browning, a former manager at General Motors Co. and Ford Motor Co., “did a terrific job and he knew the next chapter was going to be daunting,” said Michelle Krebs, an analyst for auto researcher Edmunds.com. “To eke out even a fraction of a point of market share in the U.S. is significant, and what Volkswagen was looking to do was double sales by 2018. It just seemed unrealistic from the beginning.”

While VW has risen to become the world’s third-largest carmaker thanks to growth in China and Brazil, the U.S. has remained something of a riddle for the company. Finding a solution to make VW more than just a niche player is key to achieving its goal of becoming the world’s biggest automaker.

U.S. sales of the Volkswagen brand fell 5.2 percent to 373,700 vehicles through November. The company targets sales of 800,000 cars a year by 2018.

VW declined to comment beyond the release. Horn, who joined the carmaker in 1990, is currently head of VW’s global after-sales operations.

Cheaper Passat

After being appointed as head of VW’s U.S. operations in September 2010, Browning helped roll out a bigger, cheaper version of the Passat sedan in 2011 in a bid to appeal to mainstream American drivers.

The car, which was key to the company’s strategy to become more than a niche player in the market, never cracked the Top 20 models in the U.S. After initial gains, Passat sales slipped 2.1 percent this year to 100,398 vehicles on tougher competition from American rivals.

A $1 billion factory in Chattanooga, Tennessee, which was built to assemble the model, has capacity to produce as many as 150,000 vehicles a year.

Volkswagen’s struggles in the U.S. are largely the result of the carmaker being slow to follow up the Passat. Plans to flank the sedan with a big, affordable, U.S.-style sport-utility vehicle haven’t been finalized 11 months after the Crossblue prototype was shown at the Detroit auto show. Based on typical development times of three years, the model may not reach showrooms before 2016, five years after the Passat.

The lack of a competitor to the Ford Explorer and Toyota Highlander leaves VW in the SUV segment with just the compact Tiguan and the $43,995 Touareg, which costs 11 percent more than the luxury Lexus RX. That shuts it out of a big chunk of the U.S. market.

To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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