Volkswagen Invests Billions in U.S., But Comeback Plan Could Backfire

2011 Volkswagen Jetta

2011 Volkswagen Jetta

Remember when Volkswagen was the top import brand in the United States?

It was about 40 years ago, so you’ll be forgiven if that fact has slipped your mind.

Today the carmaker holds just 2 percent of the U.S. market, pushed to the fringe by Japanese companies that have dominated sales here ever since. Now VW wants its mojo back and has an ambitious plan to retake the American market.

Like all plans involving a serious comeback, VW will face some stiff challenges that could derail everything.

Here’s the plan:

According to the Detroit News,

The company is investing $5 billion in North America, building a $1 billion assembly plant in Tennessee, and more importantly, redesigning its compact and midsize cars to meet the demands of mainstream U.S. car buyers.

VW can price vehicles more competitively by building them here. For example, the 2011 Jetta will be bigger (and blander) than the outgoing model, but cost about two grand less, starting at around $16K. Rumors of a Jetta coupe are floating around the blogosphere, too, adding more intrigue and potentially padding sales numbers. A replacement to the Passat will start around $20K and also be roomier, putting it in direct competition with the Toyota Camry and Honda Accord.

The new Jetta and Passat (or whatever its replacement gets called) are integral to VW’s plan to become the world’s biggest automaker by 2018, when it hopes to quadruple current sales to nearly 1 million vehicles a year.

Like I said, ambitious planning, no?

Overly ambitious, I think. Why strive to be the biggest when all that brings are accusations of sacrificing quality for quantity? Jut ask GM and Toyota how being the biggest worked out. VW would be better off working toward being the best and keeping its edgy styling, instead of inching toward mainstream boredom.

Regardless, VW’s plan is charging forward, but it already has a big problem: The company currently doesn’t have a leader here in the U.S.

Stefan Jacoby, a 25-year vet at VW, stepped down last month and left what Business Week calls a “U.S. leadership vacuum” at the top of VW’s U.S. org chart. Companies don’t quadruple sales in eight years without strong, experienced leaders. Not to say Volkswagen won’t find an acceptable replacement, but whoever that is will have some serious trouble trying to convince Americans that buying more blandly styled mass-produced sedans is a good idea.

Can Volkswagen regain its title of top import brand in the U.S.? Should it even try?


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