Can Volkswagen's Plan to Become a US Car Company Work?
The new head of Volkswagen’s U.S. operations believes that if the German car company’s American unit can become more American, it can solve its sales problems here. The plan has flaws.
According to comments he gave Automotive News, Hinrich Woebcken, CEO of Volkswagen Group of America, said:
We want to get more Americanized not only in our product but in our business. It’s not that we’re giving up on the genes of the Volkswagen brand. Volkswagens are Volkswagens. But what we recognized over the years is … that we were too much a small-car company, too much a sedan company.
The comment misses a critical mark. Almost every large non-luxury manufacturer based outside the United States already has “Americanized” its lineup. And most sell many times the number of vehicles VW does domestically.
Part of Woebcken’s plan is to drop prices and add models at a rapid pace. That puts him up against companies such as Honda, Toyota, Nissan and Hyundai, which adopted this tactic decades ago and have lineups that include low-priced coupes, sedans, sport utility vehicles and crossovers. Each of these companies sells several times the number of cars in the United States that VW does. And each has a stronger brand, larger dealer network and, for the most part, a better reputation.
VW also has another hurdle, which is that the U.S. car industry has peaked, at least for the foreseeable future. VW has to pick up market share against the best and largest car companies in the world.