VW's Sales Drop 22% as U.S. Troubles Cripple

Volkswagen’s efforts to break into the world’s second largest car market continue to fail. Its sales in the United States dropped 22% in June to 28,827. As its market share eroded, sales of almost all its major models declined. The numbers were worst that its year-to-date figures — a decline of 13.4% to 179,144.

VW’s management tried to put a spin on its troubles, but it could say nothing of substance:

“Our core models, the Passat and Jetta, continue to show strong demand in the market, particularly for our TDI clean diesel powertrains,” said Mark McNabb, chief operating officer, Volkswagen of America. “With the launch of the much-anticipated 2015 Golf GTI, as well as the upcoming introduction of the all-new 2015 Golf TSI and even more fuel efficient diesel engines, we are confident Volkswagen will be back on the shopping list for more customers.”

VW’s best-selling vehicle, its Jetta Sedan, posted crippled results, falling 22.1% in June to 10,102. Passat sales dropped 33.6% to 7,222. The single bright spot was sales of the GTI, which were up 64.8% to 1,927.

VW executives continue to hope new models will lift sales, but the number of new vehicles will be small, and the Volkswagen brand cannot bring enough customers to its dealerships to take advantage of them.

Among VW’s problems are issues with its product quality. In the latest J.D. Power 2014 U.S. Initial Quality Study, VW ranked well below average, with 128 problems per vehicle against an industry average of 116. In the American Customer Satisfaction Index, its results were slightly better than average, at 84 on a scale of 100. The industry overall posted a number of 83. VW’s average dropped 1.2% from the previous year.

VW also has to contend with a small army of competitors, even outside the largest car companies in the United States based on sales — General Motors Co. (NYSE: GM) Ford Motor Co. (NYSE: F) and Toyota Motor Corp. (NYSE: TM). Among modest-sized manufactures that tend to sell modestly priced cars like VW, Nissan sold 109,643 vehicles in June, Hyundai sold 67,407, Subaru sold 41,367 and Kia 59,644.

VW’s stated goal is to become the number one car manufacturer in the world. Its success in China will help it. And VW has the largest market share of all auto companies in Europe. Neither of those is entirely enough to offset its American disaster.

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