New CEO Won't Save Volkswagen in America

Volkswagen has a new CEO in America. He faces things he cannot overcome, including a limited lineup of models, too many cars in categories Americans no longer buy, as well as competitors that have more dealerships, more marketing dollars and better brands.

VW really doesn’t need a CEO in the United States at all. It might as well run the unit out of Germany.

The company announced:

Scott Keogh, head of Audi of America, was named president and CEO of Volkswagen Group of America as well as head of the Volkswagen brand for the North American region. Keogh, who joined Audi in 2006, will succeed Hinrich J. Woebcken, who led the successful transformation of Volkswagen in North America. Woebcken will remain with the company as an adviser.

At least Audi is relatively successful in the United States.

VW has escaped from the diesel engine scandal that harmed both its image and its sales. U.S. unit sales are on the rise. They hit 266,228, up 5.5% from last year, but VW only has 2% of the U.S. market. If not for sales of its new Tiguan sport utility vehicle, which are up 987% to 67,232, VW’s sales would be a wreck.

VW’s model line shows why the company cannot be a success in America. It is mostly made of low-priced sedans that get high gas mileage because they have small engines. This is the sort of lineup Ford abandoned in the United States. Americans have a growing taste for pickups, crossovers and SUVs. While VW has SUVs, they are very limited in number. The large Japanese and U.S. car companies best it in similar models, even with Ford’s exit.

VW’s dealership count is almost much lower than those of major Japanese companies and the so-called Detroit Three. Its marketing budgets are also dwarfed by its larger competition.

VW lacks the tools for a turnaround, so the appointment of a new CEO won’t matter.