Volkwagen Braces for Another Month of Bad Sales

Print Email

Sales in the United Starts have been the Achilles’ heel of Volkswagen’s global prospects for year. VW is the number one car company in Europe, and most months it vies for the same position with General Motors Co. (NYSE: GM) in China, the world’s large market. VW has lost ground in America for several years, and that shows no sign of ending.

Kelley Blue Book analysts expect VW sales to fall 12.6% in February to 37,000. That would press its U.S. market share down to 3.1% from 3.6% in February of last year. KBB expects overall U.S. car and light truck sales in February to be flat at 1.19 million.

The 2014 negative trend continues one that was just as bad in 2013. VW’s sales fell 6.9% last year to 407,704.

VW’s U.S. problems cost Volkswagen Group of America CEO Jonathan Browning his job in December. He cannot be blamed much. His parent company has loaded the U.S. with uninspiring models. And the quality of its cars has placed VW close to the bottom of many reliability studies — particularly the carefully watched research from J.D. Power.

This lack of inspired and innovative cars has been compounded by the rapid rise in new models from other mid-tier manufacturers, particularly Honda Motor Co. Ltd. (NYSE: HMC) and Nissan. Honda’s recent upgrades of the Civic and Accord have helped them to remain among the best-selling models in the United States. Its CR-V is among the best-selling crossovers in America. Nissan’s sales in the U.S. rose 11.7% in January to 90,470, which puts it on a pace to sell three times as many vehicles in the country during 2014 as VW will.

Finally, VW is burdened by a limited model line, which lacks, among other things, a pickup. Pickups remain among the largest category of vehicle sales in the United States. Without one, any manufacturer sets itself difficult limits. VW’s current target, at the low end of the market, relies on the Jetta, Passat, Golf and GTI. These low-priced, high gas mileage cars fight across the most crowded end of the car market, which puts VW at another disadvantage.

Volkswagen’s sales in February will be weak. Worse, the trend almost certainly will continue for the balance of the year.

RSS Facebook Twitter