Bloomberg News

Volkswagen Says Award to Help Sales of Redesigned Passat Sedan

November 16, 2011

Nov. 16 (Bloomberg) -- Volkswagen AG, aiming to increase U.S. sales with a revamped Passat, has received an award from Motor Trend magazine that may help its marketing of the redesigned midsize sedan.

Motor Trend said today that it selected the Passat as its “Car of the Year,” citing the vehicle’s roomy interior, range of powertrain options and “well-tuned chassis.”

“It really shows the work that’s gone into the development,” Jonathan Browning, head of VW’s U.S. operations, said in an interview prior to today’s announcement at the Los Angeles Auto Show.

The award will have a “huge” effect on the car’s marketing, he said, because “it’s absolutely one of the top honors that you want to receive in the U.S. industry.”

Sales of the new Passat sedan rose to 5,040 in October, its first full month in U.S. showrooms, the Wolfsburg, Germany-based carmaker said in a Nov. 1 statement. VW brand sales in the U.S. rose 24 percent to 263,486 this year through October, according to researcher Autodata Corp.

The award arrives as VW’s sales unit nears its first annual profit since 2002, Browning said.

“We’re seeing great progress this year towards profitability at the national sales company level,” he said. “We’re on track for achieving better than break-even.”

Browning declined to provide specific figures. The sales unit’s results don’t include VW’s U.S. manufacturing or finance operations, he said. VW’s consolidated U.S. results are supposed to be profitable in 2013, he said.

VW’s 2018 Target

Volkswagen’s “whole 2018 growth strategy is proving out well in reality,” Browning said.

The automaker is counting on reaching 1 million U.S. sales, including deliveries from its Audi luxury brand, to make it the world’s largest and most profitable automaker by 2018. Jetta and Passat models accounted for 53 percent of the VW brand’s U.S. sales last year; this year through October, they have made up 61 percent of deliveries.

VW opened an assembly plant in Chattanooga, Tennessee, earlier this year to build the Passat, which was designed to appeal to U.S. customers.

“Passat has to be the vehicle that represents the heart of what Volkswagen stands for the U.S. marketplace,” Browning said.

Initial sales of the Passat show that the sedan’s average transaction price is about $27,000 compared with about $23,000 for the industry average in the segment, Browning said.

“You see a premium in this very early data for the Passat,” he said. “It will narrow, but it’s a great start.”

--Editors: Bill Koenig, Jamie Butters

To contact the reporter on this story: Tim Higgins in Los Angeles at thiggins21@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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