Volkswagen's Play for America

Posted by: David Welch on December 4, 2007

Finally, Volkswagen AG seems serious about really growing in the U.S. car market. The German media says the company is scouring the U.S. for a big patch of land to build a factory. This will not only be welcome news for whatever state gets the factory (in this economy, new manufacturing jobs are just a wee bit scarce) it’s good news for VW dealers. Once the company commits production, then they have to actually design, engineer and price their cars to sell to Americans. VW hasn’t done that very well since they launched the first Beetle here.

This is a big move from the German carmaker. Usually when VW says they’re making a push in the U.S., it means little more than a big ad campaign. They shock us with nasty car wrecks or grab eye balls with leggy vixens. The result: declining relevance and paltry market share of 1.4%.

Meanwhile, Volkswagen says it wants to take on Toyota. Well, to do that VW needs two big changes to its line. First, the cars are just too expensive. Since VW thinks it can eventually topple Toyota, its brass should take note that a basic Camry starts at $18,570 and a new Passat (also with a 4-cylinder motor) starts around $24,000, according to Edmunds.com. You can get a loaded V-6 Camry for around $25,000. A U.S. plant might help, since cars imported from Europe become pricey given the dollar’s weakness these days. Next, VW needs to boost quality, which hasn’t exactly been the company’s calling card. Maybe a new plant would give VW a clean sheet to start from, but it also means a virgin workforce. Nissan tried that at its new plant in Mississippi and had plenty of quality issues with the trucks built there. In other words, Toyota doesn’t have too much to worry about.

Reader Comments

Noz

December 4, 2007 8:33 PM

Agreed, Toyota has little if anything to worry about re: VW. The reasons mentioned are all valid however understated for diplomatic reasons.

What I have found out here on the Left Coast is that a great many VW buyers have bought into the 'German superiority' myth. The ads scream German Engineering, as if that were something to be really proud of. Check out MB for a living breathing example of many years of problems. And not because of the Turks screwing the cars together in Germany. The glitches are built in by the engineering staff. But Hecho en Mexico? Well, there is more to that comment than most admit. Often the quality of the vehicles made in Mexico is superior to that of those built within our borders by jaded, bitter, over-weight, over-paid, pampered and under-motivated UAW members looking forward to just one thing--leaving the factories. Sad but true.

I don't see this changing regardless of what Gettlefinger says and/or does.

That Nissan has had colossal design and assembly problems in its US operations is a given when considering the attitude of the boss. One does not long make money by relentlessly cutting costs. Far better is to do one's best in working with good healthy suppliers who are making decent money and looking forward to a long working relationship. A partner in crime is another way to put it.

Blue Dog D.

December 5, 2007 9:04 PM

"Tie-ota" has its own problems to worry about, viz. quality or the current lack there of.

Ed

December 5, 2007 10:32 PM

I don't think anyone needs to worry about VW (except VW). As far as a US plant, remember the junk that came out of New Stanton, PA in the 1980s. It was actually worse than German built. In many cases the Mexican cars were better built.
In the 20-30 years since, VW has not done much better.
As far as Nissan, yes they had some problems in US plants, BUT unlike VW and the Germans in general, they quickly resolved them and Nissan products today are far better than VW in quality and just as good in "Fahrvergnugen". Ghosn has made some mistakes, but overall is the most dynamic leader in the industry. Nissan/Infiniti products are getting better and better by the day - not only in quality, but in its offerings for the US market.
Much of the criticism leveled at Ghosn is derived from jealousy about his successes in spite of what his naysayers say.
If VW were run by Ghosn (or the Japanese), it would be one helluva better company with much better products. The "krauts" are "sauer", if you know what I mean.

Franck in Kansas City

December 6, 2007 10:56 AM

"VW hasn't done very well" and "declining relevance"? Kelley Blue Book kbb.com says that VW has the most resale value over any brand in America! The GTI is voted 2007 car of the year by Automobile Magazine and 2007 Automotive Excellence Award from Popular Mechanics; the Jetta the first car to ace side impact collision from IIHS.com. The value is there. The market dictates that. Comparing a Camry with a Passat can be done on Edmunds.com, and there is a reason the Passat costs more (e.g. 4 yr. / 50000 mi. vs. Camry's 3yr/36 and and 12 years on corrosion vs. 5yr; 207 ft-lbs. @ 1800 rpm vs. an anemic 161 ft-lbs. @ 4000 rpm; 6 Speed tiptronic Automatic with paddle-shifters vs. none; Traction and Stability Control standard on the Passat, optional on the Camry; leatherette vs. cloth; remote power door locks vs. not; heated mirrors vs. not; electro-mechanical power steering, dual illuminated vanity mirrors, compass & trip computer, remote anti-theft alarm system and so on). Add all that equipment and trust me, you don't have a $18,570 Camry. In addition, the engine in the Passat was voted best engine in the 2.0L category by www.ukintpress.com/engineoftheyear three years in a row. It's so much fun to drive. I'd compare the Passat with a Audi A4 or BMW 3 or 5 series. Camrys are stripped down to sell cheap, and it's been reported that VW is thinking of doing the same to their cars in the US to cater to the American mind who looks at something of comparable size and shape and wonders why one can be so expensive - it's not expensive silly, it's just different. Already #1 in Europe and China VW, despite what the critics say, is positioning itself with the UP! and its revolutionary hot cell/hydrogen/diesel technology to become the #1 manufacturer in the world, and a champ for the people - once again. They were named "Best of what's new 2007" with their Audi R8 and "Best of what's new 2006" with their Bugatti Veyron. Volkswagen looks at being #1 on the global scene, acrosss all their brands, not just America.

David Welch

December 6, 2007 3:32 PM

Franck in Kansas City makes a good point about equipment changing the sticker price. But VW still has two problems. One, Toyota still often offers greater value when you add equipment in. And two, when shoppers go to sites like Edmunds, which at least 70% of them do, they will instantly see higher stickers for VW cars and some will feel priced out. GM had this problem back when its strategy was to show a high MSRP and try to close the deal with huge incentives. Shoppers saw the high MSRP and looked no further.

Doug

December 6, 2007 4:53 PM

My name is Doug, and I have bought into the German Manufacturing craze... I own a 2000 Passat. It shares a lot with the corresponding Audi A4 chassis of similar year but a bit more space. I love the design, I love the interior and honestly, everything since then that I've sat in that wasn't German felt cheap and flimsy. Nothing japanese or american has come close to that feeling. Reliability is my -only- complaint about VW, and with 25 years of living with VW's I know to stay clear of the base model VWs... but I will buy a used VW long before I buy a new Asian/US. Unless its a high end Saturn (though those are German made as well oops...)

Eugene

December 6, 2007 6:48 PM

I'm Going to have to agree with Franck on this one.

I'm a sales consultant for VW and there is a reason why I'm here and why most vw sales guys are working for VW: Passion.

You really pay for what you get and we KNOW that you can get an asian or a domestic vehicle for less, you also get a boring to drive car, less standard equipment, terrible fit and finish and (with American cars), terrible resale value.

I own an iphone, sometimes it gets stuck on me, but the matter of the fact is; it's one of the most beautiful things made which has that"WOW" factor.

When I drive around in a Passat, people look at me, I feel great! You don't get the same thing out of a Honda accord or a Toyota Camry.

I dont think VW should do what Toyota does, we should keep making GOOD cars, DIFFERENT cars, SAFE cars. If there is a more cost efficient way of doing that without stripping the car down sure; otherwise, you get what you pay for!

Noz

December 7, 2007 4:22 PM

Blue Doggie, take a look at the article just above this one that mentions the #1 & 2 brands when it comes to loyalty. You might also learn to write and pronounce Toyota correctly. It consists of two characters, Toyo, and ta. Using your method, German would be Ger person.

And Eugene, looking good in your car may suit you just fine. When I see someone in a VW I feel sorry for them realizing how tenuous their time is until the next repair session at the VW dealership.

Being Car of the Year of M/T, C/D, R/T, Automobile Mag is hardly something to gloat over. Their systems are rife with politics and highly subjective thinking despite their efforts to appear otherwise. To me, there is just one car bible, and that is Consumer Reports both in terms of their comments and especially those of their subscribers so easily shown in their charts. I dare you to take a look at 10 year's worth of April Issues or the Annual Buyer's Guide--and then come away with feelings of German superiority, let alone VW.

Franck, dream on... that's about all you have going...

Dave

December 8, 2007 8:32 AM

Have you critics looked at a current VW? I mean closely? Only time will tell on reliability (and I bought a '07 Jetta last year - my fourth VW spread out over 30 yrs so I am as anxious about that as anyone.) However, the driving dynamics are great, and get better as speeds rise. Even on my base level model ($17,400), the interior lighting and materials used are top notch. Safety is best in class, fuel mileage not bad. At current pricing, they are a good choice. By the way, Consumer Reports just reported that Jetta quality is rising. That's encouraging.

Marcus

December 9, 2007 3:03 PM

Everyone is going to have their opinions about whether VW is a good brand or not. I own a 2002 VW Jetta TDI, and I currently have over 152,000 miles on it. Have I had issues with my VW? Yes, I have. I have had coolant leaks on two occasions, and I question VW's decision in putting certain interior touches that have not worn well after almost 6 years. I agree with several of the comments above regarding how a VW drives. I test drove a Toyota Camry, a Nissan Altima, and other brands of cars, and all of them were boring to drive. Granted, this was back in 2002, and since I have not driven newer versions of those cars, I could not say if the performance or handling has improved. People buy European cars, especially German cars, for performance, safety, and handling. I have 6 airbags and a full spare tire in my car, and none of the Japanese cars came close to having those features for the price I paid for my car. VWs are expensive, and I truthfully do not feel like a new VW Jetta is worth $25,000. Some of us buy certain cars because we can only afford that type and brand of car, and for those who can afford the car they want, they buy the car that feels the most comfortable to them. Would I buy another VW? Maybe one day. VW should not chase after Toyota but to improve reliability, dealers, and service experiences, so that they can retain the customers they already have and then build a customer base from there. VW has some good looking cars coming out in the next couple of years. The test of any good company is to back them up against the wall and see what they are made of. I am waiting to see VW's next act.

Blaine Stanziana

September 12, 2008 3:05 AM


Hello,
I saw on the news the other day that Volkswagen Of America decided to invest nearly a billion dollars on a new assembly plant near Chattanooga Tennessee. Well for starters I would like to tell the world what Volkswagen Of America has done to the State of Pennsylvania and thousands of dedicated employees, of which I was one of them. Volkswagen opened an assembly plant in New Stanton Pa in 1978, when NBC news was there when the first Foreign car rolled off a United States Assembly line on April 10th 1978, I stood there and watched this historic event unfold.

It was a huge milestone for the USA and Pennsylvania, it was never done before and I was truly proud to have been a part of this historic moment. We produced the Rabbit, The GTI, I drove the first GTI in the United States before the public and dealerships even saw a picture of one ,the Rabbit Truck, the Golf, The Jetta all made with Pennsylvania pride and quality. We produced 1.2 Million cars for Volkswagen from 1978 to 1988 when Volkswagen decided to close this plant after their Pennsylvania Tax Breaks had expired!! They came to the USA and basically destroyed thousands of lives in the process by not doing what ever it took 20 years ago to get a new car design that would sell, and listen more to their employees with their suggestions and concerns on manufacturing and production issues.

Volkswagen has a lot of nerve for what they did to Pennsylvania and thousands of Employees, by bringing another plant to the USA. I am going to get in touch with NBC, ABC, and CBS news and tell the real story on what they pulled and how it could have been avoided. I have pictures of the first car coming off the assembly line, the 500,000 vehicle, the 1,000,000 Vehicle and sadly the last car to roll off the assembly line on 7-14-88. I also have a video tape of the entire assembly plant which was dedicated to me, I have the only copy in the world, this video was made for me due to an industrial accident in which I was not expected to live which took place 14 days before the plant closed it doors forever.

I want to tell the real story on how VW came to Pa 30 years ago, Pennsylvania also invested over 70 million dollars in road and bridge expenses to help VW open this plant in which they did, but left as soon as the Pa tax breaks were expired and destroyed many many lives in the process. I could tell you about 7 friends of mine who committed suicide because when their job left in 1988, so did their lives as a productive member on a assembly line where we gave our best and we gave it our all, all of the time which was not good enough for Volkswagen. What amazes me is that the economy was much better than it is today, but they foolishly closed a great facility, but in 2008 with the economy in shambles, they now want to invest nearly a billion dollars in Tennessee, trust me the people of Pennsylvania will voice their opinions just as I am going to. They say fool me once it's your fault, fool me twice it's my fault. Contact me I will tell the real story!!!
Blaine Stanziana

Drew Galloway

May 24, 2009 11:38 PM

Blaine was very accurate in his description of what happened at VW. I worked there for approximately 8 years & I drove their cars while I did. I also encouraged my parents, brothers & nephew to buy Golfs as well. My reward was to get laid off 7 daye before Christmas.

A word to anyone considering leaving a decent job to go work for these guys, think long & hard about it. I heard the rumours when I got hired there that it would only be a 10 year stint & after the tax breaks were gone they would be out of there. I wish I would have listened if I had I would be retired right now.

I will never again buy a VW product. again

Warren Kuhn

June 15, 2009 1:57 PM

Blaine - Jeez dude, it seems like you are all over the web complaining about VW and your wife's flesh eating disease. Move on man. Most people in the country are lucky to stay at a company for 10 years. I haven't been one of them yet. What the hell does Volkswagen owe you? You went to work for them, they paid you. End of Contract.

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Want the straight scoop on the auto industry? Our man in Detroit David Welch, brings keen observations and provocative perspective on the auto business.

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