Volkswagen AG, Europe’s largest automaker, is preparing to bring new and updated models from its namesake brand to the U.S. on a shorter timeframe to meet American demands for revamped products more quickly.
The VW marque will introduce new products every five years, with major refreshes after three years, Michael Horn, head of VW’s U.S. operations, said in an interview. VW currently introduces completely revamped vehicles every seven years, tweaking them after four.
“Customers want quicker change,” Horn said. “We’re working to shorten the life cycle of the products to bring more new features and design elements, in terms of face-lifts, to the market quicker. We believe we have a positive business case. It commercially makes sense that we move.”
The faster pace of introductions, which a management board committee must still sign off on next month, wouldn’t start until 2017 at the earliest, meaning it wouldn’t help much toward the company’s goal of reaching 800,000 VW brand sales in the U.S. by 2018, Horn said. Through April, VW had sold 118,154 vehicles in the country, a 10 percent decline from last year.
While Wolfsburg, Germany-based Volkswagen has risen to become the world’s second-largest automaker, the U.S. has remained a riddle, confounding progress in the second-biggest national market that is important to making VW the world’s biggest automaker by 2018.
“VW should speed up product introductions to recover market share,” said Gian Primo Quagliano, head of automotive research company CSP in Bologna, Italy. “VW has the potential to boost sales in the U.S, having an impressive range of models; it just has to be better with the timing of launches.” To reach CEO Martin Winterkorn’s sales goal, Volkswagen would have to almost double U.S. sales from last year’s more than 407,700. Horn called the target a “sporty challenge.”
“It’s an achievable goal, but it’s a stretch,” he said.
A board panel has met every other month since January to discuss the brand’s U.S. strategy, Horn said. The committee includes Winterkorn; Hans Dieter Poetsch, VW’s chief financial officer; Christian Klingler, head of sales and marketing; Francisco Javier Garcia Sanz, head of procurement; and Michael Macht, head of production.
About 50 people from Volkswagen’s research, engineering, sales, production and marketing departments attended a two-day summit in Wolfsburg in February to study the challenges and opportunities in the U.S. market, Horn said. The group looked at VW’s product cadence, fleet fuel efficiency and product portfolio.
“The attendance was even much bigger than we originally intended because they want to help,” Horn said. “For the first time we’ve discussed the business case to really shorten our lifecycles here in the U.S. and to be a little bit more dynamic in terms of design changes.”