Volkswagen Faces Big Problems In the U.S.

Tim Marrs

"The U.S. is a case of disaster." So said Bernd Osterloh, Volkswagen board member and VW’s works-council chief while discussing his company’s failure to crack the U.S. market the way it said it would several years ago, when VW blurted out its ambition to be the largest carmaker on earth by 2018.

To climb that mountain, in addition to continuing to rack up significant numbers in Europe, China, and South America, Volkswagen was going to have to step up its U.S. game like never before and notch 800,000 sales a year. Which was a long way from the 569,696 units sold here in 1970, its best year ever, and longer still from the 213,454 the brand shifted in 2009.

Things moved in the right direction, initially. With the arrival of new value-priced Passats and Jettas, a new plant in Chattanooga, and an apparent renewed commitment from the home office, Volkswagen of America saw sales above 400,000 in 2013, more than 100,000 of them diesels. That’s a record rate for VW oil-burners and pretty cool, except that overall sales had fallen 7 percent from 2012, with a particularly bad December, down 23 percent, undergirding an annual market-share decline of 13.3 percent and pointing to a larger problem -- halfway to its target, VWoA’s growth stalled.

The folks back home knew there was trouble. Hence the hasty departure of Volkswagen of America CEO Jonathan Browning -- a Brit -- last December. Hence Osterloh’s harsh words, and hence the unusually self-critical position of scapegoat Browning’s German-born replacement, Michael Horn, who called for better understanding of the American market by the parent company. Horn wasn’t going out on a limb with his critique. As VW’s hereditary overlord Ferdinand Piëch acknowledged to Bloomberg News, “We understand Europe, we understand China, and we understand Brazil. But we only understand the U.S. to a certain degree.”

Right he is. There’s general agreement around Volkswagen -- and the U.S. automotive press and the gearhead community—that when it comes to this country, VW needs to get a clue. Unfortunately, recent indications of its idea of what that clue might be -- me-too SUVs and possibly even a pickup—make me wonder, as does the firm’s seeming inability to fully commit to its one plant on U.S. soil. VW has never adequately explained how it is going to hit its target or utilize the king-size space it got from the state of Tennessee, and this reporter, for one, doesn’t believe that the three-row, seven-seat CrossBlue SUV of 2016 is going to close the books on those questions. When it arrives, it will be not a moment too soon—rather more like ten years too late. It will have nothing to do with VW’s core values and no particular relevance.

I wish the nice people at Volkswagen of America the best. So when they invited me recently to drive the new 2015 Volkswagen Golf, I was happy to accept. It’s a fine car, and if it seems that little bit bigger, as well as more anodyne and cost-cut, it also promises to be attractively priced now that it’s built in Mexico. Still, it isn’t expected to be a huge seller; even a doubling of U.S. sales, as some predict, would add only 30,000 units to Volkswagen’s annual totals.

Volkswagen ought to set its sights higher and market the Golf harder. It should also think smarter about how to make it in the United States. Why not try building superior small cars, the way it made its name in the first place? VW builds cars one (Polo) and two (Up!) sizes smaller than the Golf in Europe. Why not at least bring us the next Polo, which will surely share the MQB architecture and could be built alongside the Golf in Puebla?

When I spoke to Horn in January, he insisted that the demand for small cars here is uncertain, the solid success of the supply-constrained Honda Fit and Chevy Spark notwithstanding. He said when demand was clear they’d address it then. He seemed more enthusiastic about the pickup-truck idea. Frankly, if the first Volkswagen guys to land in America in 1949 had wanted to follow instead of lead and actually waited for an invitation to sell a slow, noisy, ill-handling, air-cooled, rear-engine subcompact, it would have been a disaster. So, hey, Volkswagen. As you once said, think small.

bigiron58 .
Well, I guess I am going to have to eat my words. I got rid of the Subaru (boring) and picked up the Mk VII GTI. The level of quality and performance far outshines the earlier VWs I owned. And this is a made in Puebla VW.
Anyway, VW needs to get a clue: bring in the Polo, drop the SUVs, and give us more oil burners. They are headed in the right direction with the new Golf, but they need to do more. More advertising, more rebates, more more more. 
Another thing: the dealer network is abysmal. 
The Ant
VWoA is sooooo terrible.
Purchased a 2013 Touareg TDI LUX - These things eat tires, and now the brake rotors are warped.  VWoA just smiles and says they will be happy to supply the parts and labor as long as I pay for both.  Too bad this all started with only 14k miles on the odometer.
If you check their website, they advertise this SUV as the "Premium SUV".
Don't get duped!  The only "premium" is the one you paid at time of purchase.
This is my last VW.
bigiron58 .
VW  suffers from stale product offerings, long term unreliability (but that is typical of all German makes), and a dealer network that borders on medieval. I have owned well over ten VW's but my last, a 2006 GTI, was the last straw. 
Doug S
VW styling cues are decades old and appeal to few Americans.  Market share is at the bottom and sinking.  Look at Kia and Hyundai who have gained market share over the last three years based on excellent design and quality built.  Mazda and Subaru are showing new design cues similar to the Fusion and Optima.  Lincolns MKZ has changed dramatically and shows 21st century design. VW requires new leadership in the design studio to gain any market share to be relevant in the US.
VW Steve
I keep asking VW to bring the Polo, I want to see the Scirocco here, and I wouldn't go anywhere NEAR a Mark 6 Jetta!  When is VW going to realize that VW customers in America want what every other VW customer in the world gets - a wide selection of fun-to-drive cars with real German character?  If you want that in the USA. at least there's the Golf - I love my 2012 Golf and I hope I can buy something just as great in the 2020s when I'll need another car!  Like a new Polo!  2023? Please, VW?
Greg Whisenhunt
Your vehicles look very nice, so that is not a problem. One main thing that plagues the whole VW group's products is the cost of their products, and I don't necessarily mean the cost to buy the product.  The cost of ownership is off the charts. Anytime something goes wrong, and it does often, the cost is astronomical to get it fixed. So, why don't you concentrate on low cost of ownership, reliability, and longevity of your vehicles. You get that right and I promise people will continue to buy your products in greater numbers.
That's my $.02
Herbert Guy
@WA;  I've never missed any car service in both of the vehicles. And I do all my service maintenance as required at the VW dealership, with factory trained mechanics. So the only difference as I see it, is based on my experience is where the car is manufactured. But, then you are absolutely right, you can't complain about the car reliability if you are not doing scheduled maintenance service as required. The only concern one would have is if things break down regularly in your car.   Then am told the Germans knows that Americans buy  or lease new cars every 3 to 4 years, as a result the car components being used, only last that long, which is a colossal mistake in their part. 
VW doesn't understand? Its pretty simple, give us reliable cheap and easy to maintain vehicles at a moderate price. Whether the car is built in Germany or Mexico, you can't continue to try and sell the US market the unreliable expensive to fix crap you've tried over and over again. I've owned one, a jetta, and never again.Its not the exterior design or amenities, its the overall quality and reliability of the car. Funny hownew to market Korea, old tried and true Japan, and even the domestic companies have figured this out. VW pull your head out and build reliable vehicles.
Herbert Guy
I've had had experience with 2 VW models. First time I bought a brand new 2000 VW Jetta that collapsed after 50,000 miles on it, had to sell and vowed never again to buy VW cars. It was made in Mexico.
Well, things change, so I got seduced by the  2010 VW CC model which is a sublime and fantastic design. An absolute germ, sweet, sporty car very fun to drive. I have put 60,000 miles on it with no issues at all. Whatever you ask of the car, it obliges. This is one Made in Germany.  Now they have newer CC model, it  looks so bland, ugly, and  boring, it makes you wonder if they fired the first designer, here again am not sure what VW people were thinking. I was going to upgrade to the newer model, but nope, am keeping the 2010 cc.  My VW dealers have called me over 3 times asking if I want to sell it back to them, both times I said NOPE.
Volkswagen means "folks wagon "car for regular people. I guess this car maker has forgotten its roots. Three things VW people need to get it right for the USA market.  One, well designed cars, exterior& interior. (How can they get beaten by Hyundai, look at genesis design). Two, the car needs to absolutely super reliable  and well engineered, with minimal maintenance cost. (If the Japanese can do it, with Honda and Toyota, sure the Germans can.) We are buying German engineering, so as customers we have very high expectation. Three, competitive price. VW must know customer have more choices, with Japanese and Korean cars who do those fantastic designs, build reliable cars, and  at good price.  I personally, don't mind to pay a bit higher price for a car that can run 300,000 miles with no issues.
All y'all are missing the boat here. You've got to look at the total VW corporations product portfolio to understand why VW board and management don't understand the U.S. 

VW also has Skoda, which is sportyish, and SEAT which is value-priced. And then there's Meanwhile, they've had to push the VW brand above the "sportyish" and "value priced" segment in Europe. In Europe, the Asians don't have the market penetration and brand awareness of Hyundai or Kia. 

So what VW is really battling here in the US is not so much GM, it's Kia and Hyundai. and Nissan. This is why there appears to be confusion at VW. There's too many other things for them to focus on. It's not like Europe where they've got to compete against unreliable and cheap cars from France, or slightly less than reliable cheap cars from italy. Or expensive cars from Sweden that should be a bit more value priced. Nope. They really just have to compete against Opel and Vauxhall, and if you read the interwebs, you know how they're struggling. 

And that also explains their success in China. They've been there longer than most were the first Western brand, i.e., "desirable" when compared with home grown junk. 
Take a look in the mirror, VW. It's not that you don't understand the US. People actually like your cars when they are new and under warranty. What the don't like, is when they fall apart at 60,000 miles and need horribly expensive repairs that are simple and cheap on other cars. You build unreliable junk. Fix that, and you will be successful here.
Two words... Diesel Lupo.
 Make it uber affordable.
I don't need a crystal ball to tell me the pickup truck and large SUV will fail miserably.  Unless you can soundly beat the Ford F150 and the Chevy 1500, you will only get a small fraction of the past VW owners buying them and nothing else.
I'm a longtime VW lover and buyer as I've I've owned 9. But VWoA doesn't have a clue. Thank god our area has a VW independent garage I trust more than the  VW dealers.
As everyone else has said, Europe has the good models. The design line here in the states sucks.
Too bad that Kia and Hyundia figured it out. And even the sister Audi brand knows what Americans want.
Until VWoA pulls their heads out nothing is going to change.
VW's product release schedule is a big part of the problem.
New GTI comes out in the EU we get a watered down version over a year later, and oh the performance pack that we let all the magazines test....yeah you won't get that for a while either.  You wan't a 2 door GTI do you?...yeah your going to have to wait for that...  Adaptive suspension,  maybe next year.
Teased with VWOA parading a MK6 GTD to US journalists for a while...yeah, on second thought you guys can't have that either.
Golf R.... we'll get back to you in maybe a year.
Lets not even mention in the "trendy" SUV obsessed US the Tiguan has been around forever...
I think I am fairly close to going the Focus RS route for my next car....
I would love to have a Scirocco in the garage for weekends, and a TDI Tiguan for daily use.  Unfortunately VWoA (and corporate VW in Germany) seems to think Americans wouldn't be interested.  My first car was a '77 Rabbit I drove until it fell apart from rust.  I have over 300k miles on my 2002 Golf TDI, but just cannot bring myself to purchase a new VW product.  I am currently leaning towards an Audi, especially since they have expanded their TDI offerings.  I really enjoy what Audi has to offer, and am tired of waiting for VW to get their heads straight.

As previously stated, VW owns Audi, why cant they learn from them?
Horn is part of the problem. He seems to not want offend so he says and does little just as all other VWOA chiefs have done. VW AG has product to offer that Americans will buy (Polo, Sportwagen TDI AWD) but they don't have the will to commit to bringing them here along with the investments to support them. VW invested billions into the Chinese market before investing a dime in Chattanooga. They made the choices in China and India and followed up with investment. It took them 10 years to go from thinking about building a 2nd North American plant to actually approving it. VW runs it's North American operations like a casual hobby but expects serious results.
VW has great products in Europe and there they seem to do well. They seem to have costing issues since their North American manufacturing base has been inadequate for 20+ years. To solve that problem, they stripped their North American offerings down to keep cost and pricing down to the point where the product has competitiveness issues. Let's not forget that they have a reputation for average to below average reliability and so there no surprise here. Add to this VW has a thin bench (not enough product depth) and it's clear that VW is getting the results they work for.What I hate the most about VW is they like to show product they have no intention of offering. At the European car shows, buildable product on display is product that makes it to the dealer in a short period of time. For North America, they are always accessing market interest so nothing happens. They never can make decisions. They are too risk adverse.
Benjamin Lipsman
VW seems to have no idea what they're doing... I'm a 3-time VW buyer (2002 Jetta GLS, 2002 Passat GLS, 2011 Tiguan SEL), but increasingly see them moving away from the things that drew me to the brand... their European design, engineering, handling, proportions, etc. without the price tag of BMW or Mercedes.
Their shift has resulted in bland vehicles that may be prices and sized to meet expectations of American buyers, but without the design/excitement of European cars or the reliability of the Japanese players in those categories. So what's VW's unique sales proposition?!?!
When my Jetta was totalled, I moved to a Passat in part to get better build quality. When I was ready to sell my Passat, I was unimpressed with the new American-sized one and chose the Tiguan, that offered similar interior space in a more compact footprint. Next time? I'll probably finally take the step up to Audi or BMW to get what I want (unless Alfa FINALLY returns to the U.S. with vehicles of the size I want/need).
What about their dealer network? That should merit a mention as it surely must be part of what's holding them back. 
Bring the Amarok, the Scirocco, and the Polo.  
Yup. I have no idea why anyone would buy an Americanized VW like the beam-axle Jetta, which has neither VW's core German fun-to-drive character (now the provenance of Mazda, a brand with a windex-clear identity), nor the reputation for reliability that Civics and Corollas have. Meanwhile as Kitman states, VW curiously decides not to compete in the white-hot A or B-class while Chevrolet (!) offers products in each class that sell well and help build brand loyalty. If VW decided to build the Amarok in the US or Mexico to avoid the chicken tax people would eat up a small diesel pickup truck, because that's the kind of utility vehicle that folks want out of Volkswagen. VW has lost sight of who they are and their core values. The way forward is high-quality, premium fun-to-drive cars that have tangibly German character, not blindly aping Toyota in a race to build the blandest, cheapest three-row crossover that nobody wants from VW. How they can be so shortsighted that they don't see the importance of offering a Polo, Gol or Up! (or the stillborn Bulli) in the US for the young and urban tastemakers who really get the brand in the first place is truly well beyond me. Yes, we like automatic transmissions. Yes, we like cupholders. That doesn't mean that we all want German Toyotas. Get back to who you are VW, and the customers will come.

Diesel Gould
It's easy to see why. Unreliable, and homely styling.  Just copy the formula of any of these manufacturers that came to the US after VW: Hyundai, Kia, Subaru.Audi was almost dead in the late 80's and early 90's and they bounced back.  VW owns Audi, could learn a thing or two from them.
These are some astute comments.  I had a 2001 which I recently replaced with a Toyota product, mostly because it seemed to me VW was chasing Toyota.  Back ten years ago, VW had a certain "specialness" to them...sort of an everyman's Audi.  They no longer have that image, in my mind at least.  The Jetta and Passats, while handsome,  are terribly generic in their styling (sounds like Toyota and Honda, no?).   VW has really done some serious damage to their brand perception.   Though they've gained customers, they've obviously lost some too.  Oh, and I do agree that VW needs work on their reliability.  My Golf was a decent car, but had a lot of little electrical niggles.  From what I understand, this is par for the course for VW.
I won't consider a VW due to the garbage reliability.
@WN you must be kidding me. I have owned vw and audi for for nearly 20 years and had no serious issue more then other car manufactures have.. what most american(s) are not doing is proper service and maintenance , they think then can drive on one oil for 50k miles and still be ok, or modify the car to point that safety end reliability barriers are breached , give me a break dude.. you want everything in the car for the price of basic toyota ya right ...i think you are dreaming too much... 
VW Steve
@btc909 I had issues with my 2000 Golf - brake calipers, loose interior trim, etc. - kept it running for 11 years and 86,000 miles, never regretted buying it despite the problems.  I bought a 2012 Golf - no problems so far, and I had problems with my 2000 Golf when it was still under warranty.  It's as reliable as Consumer Reports said it would be.  Both cars were made in Germany. Go figure.  
Just because you went to the trailer park school of automotive maintenance and care doesn't mean everyone else has. I've probably been driving more makes and models longer than you've been alive. VW and Audi? Now you have to be kidding me. Both are notorious for long term reliability and their lack there of. Funny how Korean Japanese and many domestic brands rate much higher. Of course you have nothing noteworthy as a rebuttal because no matter what the majority say, you're right in your mind with the small exception to the rule. Take a look at other comments here pal, you're a fool if you think you're the only one who knows how to care for a car. In closing, we are on an automotive enthusiast website, don't be such a naive moron. Have a nice day and maybe you've learned something no matter how much your folly makes me laugh.Oh and here is one more school of thought, we as Americans drive much more than any other nation in the known world. I've lived in Germany for four years, the normal every person can't afford the gas insurance and car payment to drive long distances daily like we do in the US. VW are built like Japanese cars were in the 70s but priced at a premium.

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