Volkswagen AG (VOW), Europe’s largest carmaker, debuted a concept sport-utility vehicle designed for the U.S. market to challenge Ford Motor Co. (F:US)’s Explorer and Chrysler Group LLC’s Jeep Grand Cherokee.
VW today at the North American International Auto Show in Detroit showed the Crossblue, which will be priced between the smaller Tiguan and upscale Touareg. The SUV would seat as many as seven passengers and compete against the Explorer, Grand Cherokee and Toyota (7203) Motor Corp.’s Highlander, which all start at about $29,000.
The new SUV could help Volkswagen reach its target of increasing sales in the U.S., where it lags competitors, to 1 million Audi and VW vehicles by 2018 from 577,443 last year. The SUV segment accounts for 29 percent of the U.S. market, trailing only sedans, which have a 38 percent share, according to data supplied by VW.
“The SUV segment is posting the strongest growth,” said Frank Biller, an analyst with LBBW in Stuttgart, Germany. “This is where the action is.”
VW, which today reported group deliveries rose 11 percent in 2012 to 9.07 million vehicles, says it’s preparing for tougher competition and more uncertainties in 2013 as its home region slumps a sixth year. VW came in third globally for 2012, being edged out by General Motor Corp.’s 9.2 million deliveries and Toyota’s forecast sales of 9.7 million vehicles.
Last year “was the best sales year ever,” Chief Executive Officer Martin Winterkorn said in the statement. “This is another big step forward in our strategy 2018.”
The new SUV may help VW catch up in North America, which is crucial to the Wolfsburg, Germany-based automaker’s plan to overtake GM (GM:US) and Toyota and become the world’s largest automaker by 2018. VW is trying to compensate for the effects of the debt crisis on European car demand, which has fallen more than 20 percent since the 2007 peak, by expanding in the U.S. and China.
Volkswagen could build the car at its $1 billion plant in Chattanooga, Tennessee, where it started production of a U.S. version of the mid-sized Passat (PSAT) sedan in 2011. The factory, which can currently produce about 220,000 vehicles annually, was VW’s first in the U.S. since it closed a facility in Pennsylvania in 1988.
Producing vehicles in North America instead of importing them from Europe has reduced Volkswagen’s exposure to currency swings between the dollar and the euro, which have weighed on profits in the past. Volkswagen has the goal of making its money-losing U.S. operations profitable again in 2013.
Volkswagen said in its 2011 annual report that the company globally targets increased deliveries this year and aims to top last year’s operating profit. The manufacturer’s ability to do so will be challenged by slowing sales in Germany. Industrywide registrations in VW’s home market tumbled 16 percent in December, leading to a 2.9 percent drop in 2012.
“Many markets are losing momentum,” Winterkorn said at an event in Detroit late yesterday. “If the European markets are getting weaker, we need to expand abroad.”
VW’s growth last year was paced by the Audi luxury brand. Sales at the carmaker’s biggest earnings contributor rose 12 percent to 1.46 million cars and sport-utility vehicles. The Ingolstadt, Germany-based premium brand grew U.S. deliveries 19 percent to 139,310 vehicles led by gains for the Q5 and Q7 SUVs.
“The SUV market in the U.S. offers enormous opportunities,” Audi CEO Rupert Stadler told reporters today in Detroit. “We want to expand our SUV lineup globally.”
Audi’s deliveries in 2013 may stagnate, according to IHS Automotive, with Daimler AG’s Mercedes-Benz set to gain ground helped by the refreshed E- and S-Class sedans. Volkswagen’s total sales are forecast to edge 0.7 percent higher to 9.15 million vehicles in 2013, its slowest growth pace since the financial crunch in 2009, according to IHS Automotive.
Sales at the Stuttgart, Germany-based sports carmaker Porsche, which was fully integrated into the company in August, edged up 19 percent to 141,075 vehicles, also a record. All regions posted more than 10 percent growth.
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