VW's Plan to Reconquer America

Let’s say you’ve never owned a Volkswagen before. Would you at least take a trip to a VW showroom and compare models with Toyota or Honda, if VW’s were priced the same?

That’s what’s VW’s new management in Wolfsburg is betting. As Volkswagen’s cars have quietly crept upmarket over the years, the brand lost its 1970s image in the US as “the people’s car” and lost its following. Toyota zoomed into the vacuum and became America’s value-for-money auto brand, riding that image to the top of the US market.

In Europe, by contrast, the VW brand has long reigned No. 1. For the first 10 months of 2007, Volkswagen garnered 10.4% of the European market to Toyota’s 5.5%. One reason is that Europeans have moved upmarket in their auto tastes, and are willing to pay for the newest safety and handling technology.

Americans, by contrast, are not willing to pay a premium for all the German engineering under the VW hood, no matter how many great automotive innovations its engineers pack into new models. If they go German, they go all the way to BMW, Mercedes and Porsche. The result is, Volkswagen is stuck on the sidelines in the US market with a brand image that doesn’t appeal to the average Joe, nor to the investment banker spending his first bonus. Look at the numbers: VW sold only 330,000 cars in the US, compared with Toyota’s 2.5 million. (In Europe, the VW Group sold 2.1 million cars last year.)

To challenge Toyota — VW’s new rallying cry — the Germans aim to tailor their US models more to US tastes. That means cars stripped of some of the fancy technology that comes standard in Europe. By making more basic versions of its cars for Americans, Volkswagen will be able to slash the starting price in the US to the same level as Toyota’s comparable models. Finally, VW vows to match Toyota’s quality and service in the US — perhaps the bigggest leap of all. (Yes, Toyota-like quality is a basic precondition for VW to win US hearts and minds.)

New VW models designed from the get-go for American tastes will take a few years to bring to market. But it will be interesting to see just how fast VW starts to pick up steam in the US — and fix things like quality and service. If anyone see signs of Volkswagen doing a good mimic of Toyota in America, send tidings to this blog.

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