Another Trip Down Memory Lane

Is Volkswagen about to tap into America's '60s nostalgia again? Its first retro-hit, the new Beetle, has paid off handsomely for the German company. A wonderfully detailed variation of the sturdy little classic--with frills such as a dashboard bud vase--the new Beetle is VW's third-best-selling car in the U.S., after the Jetta and Passat.

Inspired by the bug's success, Volkswagen has created a 21st century update of its old VW bus, which was launched in 1950 but didn't enter the public consciousness until a decade or more later. If you're over 40, you remember the bus as the archetypal vehicle for hippie road trips--you know, guitar in the back, Jefferson Airplane on the AM radio, the distinctive rattling sound of an air-cooled engine as the bus tools down Highway 1 in California.

That's the nostalgia inspiring the remake. So far, the Microbus, conceived by VW's design studio in Simi Valley, Calif., is only a show vehicle. But chances look good that the studio will develop a Microbus for the market. VW expects to reach a decision before the end of the year. "We've had a very positive reaction," says marketing chief Robert Büchelhofer.

SUV FATIGUE. It's no coincidence VW unveiled the Microbus in Detroit at the January car show. "The U.S. is its target audience," says Goldman, Sachs & Co. analyst Max Warburton. The Microbus, which is roughly the same size as the current Eurovan, about 15 feet long, is expected to be priced at about $35,000, the premium end of the minivan market. The company also hopes to benefit from drivers who are showing signs of SUV-fatigue. Sport-utility sales are down 7.5% in the U.S. so far this year. "It's going to come down to how they position it," says Wes Brown, a consultant at Nextrend Inc., an auto-research firm in Thousand Oaks, Calif.

The Microbus' exterior is quite faithful to the old, oblong-shaped VW bus, which was a popular family hauler in the U.S. as well as a flower-power mobile. But the interior has been transformed to resemble the inside of a space vehicle. That's important, since the cutting-edge features inside the bus are likely to appeal to Europeans, who look back less than fondly on their austere postwar landscape. Although VW sells seven times as many vehicles in Europe as it does in the U.S., Americans buy twice as many Beetles as Europeans.

Selling nostalgia certainly does not mean selling old technology. The Microbus would utilize new safety systems, for example, to help prevent rollovers. The show bus features rotating, removable seats with video screens in the seat backs and a table that folds out of one of the middle seats with a monitor for DVD movies, games, or Web surfing. A seven-inch screen in the front provides an extensive view of what's happening on the road behind the Microbus, all captured by a camera. A clever touch, for those who want to look back.

By Christine Tierney in Frankfurt and Joann Muller in Detroit

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