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Volkswagen’s Re-Branding Strategy in Wake of Dieselgate Focuses on Sex, Crossovers

Sitting down with VW’s senior marketing brass at the 2017 New York auto show

With oceans of TDI-powered cars sitting in lots awaiting uncertain fates, the foul odor of deception lingering in the air, Volkswagen’s brand image is in worse shape than it has been in decades. But though the company is down, it’s not out — and it’s already fighting to make its comeback. To do so, it will need to rebrand itself and refocus its efforts on new territory.

That’s exactly what the brand is planning to do, according to Vinay Shahani, Senior Vice President of Marketing at VW of America, and Dr. Hendrik Muth, Senior Vice President of Product Marketing and Strategy. AUTOMOBILE sat down with Muth and Shahani during the 2017 New York auto show to learn more about the brand’s efforts at repairing its reputation, including the new product strategy that will be the centerpiece of the effort in North America.

First and foremost, a seachange in the way the U.S. and North American markets operate in relation to the home office in Wolfsburg is underway, and it’s leading to much greater autonomy in product planning and brand positioning. One of the primary aspects of the changes coming to Volkswagen in America is a more complete lineup of vehicles, starting with a renewed focus on crossovers, while preserving the fun-to-drive reputation won by its previous lineup of smaller cars. At the crest of that wave is the Atlas seven-passenger crossover, which is built around the same MQB platform that underpins the Golf.

2018-Volkswagen-Golf-front-three-quarter-12

To kick off the new Atlas family crossover and the broader range focus for the brand, Volkswagen is launching a series of ads with a somewhat racy theme, though presented as innocuously as possible: a sequence of progressively larger cars a-rocking as the family grows and upgrades from Jetta to Tiguan to Atlas. It’s a cute and humorous way to explain the brand’s increased span of family vehicles, but the cynical might see the jocular sexuality as a Trump-style distraction from the brand’s ongoing problems. Taking it at face value, however, it’s a tidy encapsulation of VW’s new direction in America.

“This is the year of SUVs,” said Shahani. “Volkswagen is moving from being a small-car manufacturer to more of a full-line, family-centric brand.”

Volkswagen is also acknowledging that it has had issues beyond just the Dieselgate fiasco, including consumer questions about reliability and value. To that end, a new six-year/72,000-mile bumper-to-bumper fully transferable warranty launched for the Atlas.

“There’s a statement that we came up with that really represents an internal mantra. This is not something that will be customer facing, but it describes what the brand stands for, and that is: well crafted, fun to be in, smart to own,” said Shahani.

“I think the warranty is a great proof point of ‘smart to own’,” Shanani said, “which helps us not only in peace of mind, confidence, but also value proposition. I would put along with this, pricing aggressively so we’re in the sweet spots of segments we play in.”

With this newfound greater autonomy for the American market and the greater focus on the larger crossovers that sell so well here, it seems possible that U.S. Volkswagens might evolve along a separate path from their global counterparts. When asked if American Volkswagens would be effectively balkanized, Shahani was quick to counter. “I think you’ll have some common denominator, like the Golf family, where Golf will continue to be a world car… Atlas is built on the MQB platform, and you amortize that investment across a lot of volume when you include products like Golf around the world.”

“Tiguan is maybe another good example where we still share and we use also the synergies that we have, being a global company,” added Muth. “But we still say, for our market, we have a longer-wheelbase Tiguan because we have different requirements, whereas in the European market version, we have the normal wheelbase, because of their space and parking requirements.”

Dr Hendrik Muth

“You have to look at what’s happening in China, as well,” interjected product and technology communications manager Mark Gillies. “So, the Tiguan long-wheelbase was also being built in China, and their priority is back-seat room, for instance. Our priority is a mixture of cargo space and back-seat room, so a long-wheelbase Tiguan works equally well for the U.S. and for China.”

“Obviously we’re one brand globally, so we’re never going to have completely different positioning around the world,” said Shahani. “But it’s important to note that the reasons for rejection for the brand in the U.S. were distinctly different than that of other parts of the world. For example the proof point of the warranty is totally appropriate and needed in terms of the conquest that’s required for some of these new vehicles, and that’s not needed in other parts of the world.”

If all this talk about bigger and longer crossovers makes you wonder about the future of the sedan at Volkswagen, with much-beloved models like the Jetta and Passat, you’re not alone. But Volkswagen thinks there’s still a future for sedans, especially in the sense of playing in the more full-line, family oriented space.

“The segment is of course under pressure, it’s a very competitive segment,” said Muth. “But let’s also not forget that midsize sedans are still one of the biggest segments in the market…If we want to be a family brand, have this coverage, we have to play in the segment. What the long term is, I think this move from the midsize sedans to compact SUVs is still ongoing, but with a very competitive offer, we can still be very successful in this key segment.”

Whether the Atlas will get the traction VW desires, and whether the brand as a whole can successfully rinse away the bad taste left by Dieselgate remains to be seen. But the transition from smaller European-market-driven cars to larger, American-style crossovers does make us wonder how many Volkswagens will still be interesting in five or ten years, and how many will have rolled down the sad, slow road to boring. At the least, it looks like the Golf will carry the flag of the fun, smart, high-quality cars we’ve come to know and love from VW.

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2018 Volkswagen Atlas

2018 Volkswagen Atlas

MSRP $35,300 V6 Launch Edition 4MOTION