Booming July New Car Sales Pass Volkswagen By — Again

Print Email

With one exception, automakers are expected to post year-over-year sales gains in July. That exception is Volkswagen, which is looking at a year-over-year decline of 4%.

Automakers are getting set to report U.S. new car sales for July on Friday, and industry analysts are predicting that sales will rise at least 9% year-over-year to a seasonally adjusted annual rate (SAAR) of 16.6 to 16.8 million vehicles. That is down from a SAAR of 17 million in June, but June sales hit an eight-year high, and that’s not something that carmakers can expect to happen month after month.

Volkswagen seems unable to post a sales gain, much less a multiyear high. The company’s global marketing boss announced last Friday that he has resigned, and he will be replaced by VW’s European sales chief. The question, of course, is what the new marketing head, Xavier Chardon, will have to market.

ALSO READ: 10 Cars Americans Don’t Want to Buy

One of VW’s big problems in the United States is that its refresh cycle is too long. VW has begun rolling out new models — the all-new Golf GTI, for example — and they are gaining traction in the market only slowly. The company has also begun work on its so-called CrossBlue concept, a mid-sized SUV due to hit the U.S. market in 2016. That is still a long way off, unfortunately.

VW said earlier this month that it will invest $900 million to expand the capacity of its plant in Chattanooga from 150,000 vehicles a year to 250,000. The company would also add 2,000 new jobs. The company currently builds its Passat cars there and would add the CrossBlue SUV on a new line.

VW wants to sell 800,000 cars in the United States by 2018, essentially double its current sales level. Sales in 2013 dropped 7% year-over-year to just over 407,000 units, and through the first six months of 2014 sales are down 13% from that sorry total.

The analysts at forecast VW’s U.S. market share for July at 3.3%, down 0.4% year-over-year, but up slightly from June 2014.

It is not easy to see a major turnaround in VW’s U.S. fortunes. The company has taken years to dig this hole for itself and digging out will likely take just as long, if not longer. VW seems to be betting big on the CrossBlue SUV, but if gasoline prices turn sharply higher over the next few years, U.S. demand for SUVs could fall from its current lofty levels. Then where would VW be?

ALSO READ: GM Recalls Damage Used Car Value