VW Sees SUV Expansion Paving 10-Year Road to U.S. Relevance

  • Brand planning 19 total SUVs or crossovers worldwide by 2020
  • VW trying to shed ‘niche’ status, U.S. CEO Woebcken says

Volkswagen AG is seeking to end its bit-player status in the U.S. with an expanding line-up of the crossovers and SUVs that Americans love to buy, aiming to more than double market share in the coming years.

“We have a plan to become successful here in the United States in the next years as a relevant volume player,” Herbert Diess, global head of the Volkswagen brand, told reporters at the company’s factory in Chattanooga, Tennessee. “We can’t win America over in two years’ time. It’s a 10-year plan, but we are committed.”

Herbert Diess

Photographer: Simon Dawson/Bloomberg

The German carmaker, which now sells three sport utility vehicles in the U.S. with this spring’s addition of the Atlas, plans to introduce a fourth utility model by 2020, said Hinrich Woebcken, Volkswagen of America’s chief executive officer. That’s part of its plan to ramp up to 19 total SUV or crossover models worldwide by that year, according to Diess. The goal is to eventually exceed 5 percent market share in the U.S., up from 1.9 percent this year through July.

The plan to expand its U.S. role in the lucrative SUV segment comes as VW ramps up output of its newest large vehicle, the Atlas. VW’s factory in Chattanooga is producing 400 Atlas SUVs a day, and still has capacity to fill, said Antonio Pinto, head of the plant. The long-awaited model, with a name chosen in consultation with U.S. dealers, is a key part of VW’s strategy to meet the needs of American consumers with growing families.

VW aims to become “relevant” in the U.S., as “right now we are a niche player,” Woebcken said, adding that the brand is committed to launching two new or redesigned models a year in the country. “We want to deliver and not only announce numbers.”

Ramp-Up Plans

VW has opportunities to tap into growing demand for SUVs around the world, not just the U.S. Last week in Italy, Diess presented the T-Roc crossover, which is sized to compete in the fast-growing subcompact segment that includes the Nissan Rogue Sport, Toyota C-HR and Honda HR-V. Diess said Thursday that VW is still deciding whether the T-Roc will come to the U.S. market.

As it looks to appeal to U.S. drivers, VW lengthened the Tiguan for the 2018 model year, which comes with a standard third row in front-wheel drive variants. In August, the first full month of sales for that generation of the model, deliveries in the U.S. totaled 2,516 units, the company said Friday. Atlas sales more than doubled to 2,807 vehicles in August after a July summer holiday break.

VW is targeting 40 percent of its worldwide sales to be SUVs by 2020, up from less than 15 percent now, Diess said. The company is also planning to produce some electric models in the U.S., though it’s too soon to say when, he said.

The Tennessee plant, which also assembles Passat sedans, has added about 900 workers over the last year, bringing total employment to about 3,200, said Scott Wilson, a factory spokesman. It’s also almost doubled the number of robots to 850, he said. Output of the SUV started in December. The factory produces about 45 total vehicles an hour, up from 35 when it was only making the Passat, after expanding the floorplan by 26 percent to accommodate Atlas production.

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