Volkswagen AG sold 2 million cars from January to May of this year, with a 22.79% rise over last year. Pretty amazing record, when its volume leader in the U.S., the new Jetta, was almost universally panned by the critics, as we reported.
VW of America announced its strongest sales month (March) in seven years, with nearly 17,000 Jettas sold (out of 27,176 total vehicles). That is a 27.9% gain over last year. This fall, with new Beetles and Passats coming, they can expect to do much better.
We can all take a few good lessons from this. One: Most of us who write for the auto media are enthusiasts, and so are impressed with things like performance, handling, engineering, styling, interior and finish. Cars, to us, are not commodities.
Two: Those who make cars must concern themselves with these attributes, of course, but their business is to understand and satisfy buyer needs and wants—which may vary widely—and how these translate into what the consumer values and will buy.
Three: Consumers want and will pay for different things, even in the same model car. Thus the proliferation of trims and packages and options.
I think the latter fact is what VW capitalized on by “cheapening” the Jetta – getting the base price to $15,535, lower than its competition, and selling it without rebates and gimmicks, but encouraging upgrades and options (which Americans love) to get the average selling price to nearly $26,000.
And we all know that the big profit is in those upgrades and options. The average Jetta buyer thus ends up with a “better” car and still thinks he has a bargain (which may be true, compared to the competition—e.g., Camry, Malibu, etc.)
Now, VW’s follow-up in the fall will be the new Passat TDI (right), another car whose marketing will go against the received wisdom. That is, that diesels are a tough sell in the U.S. But this car delivers an amazing 43 mpg (highway), better than most hybrids.
In this market segment (base price is $27,895), the car includes a sunroof and other goodies, and you can option it up to $29,495 or $32,195. So VW seems to be working the same strategy, but this time with a better base car at a very competitive base price.
For those who still think the U.S. isn’t ready for diesel, watch how VW will market this car in the summer and fall. My bet is that they’ll stress German uniqueness as well as efficiency, and mostly the fact that the TDI is a real-world alternative to much of what’s in its market segment, which happens to be the biggest one out there.
Will Volkswagen’s U.S. and world sales keep rising at this level? Will its quality and dependability keep pace?