VW suffers in US elsewhere
 

VW considers halting Golf sales in US
By Richard Milne in Vienna

Published: June 16 2008 17:17 | Last updated: June 16 2008 17:17

In an attempt to lift its best-selling model closer to profitability targets, Volkswagen, Europe’s largest carmaker, is seriously considering pulling its flagship Golf hatchback from sale in the US due to the weak dollar.

The German company could also suspend sales of the new Golf – due to appear in its sixth generation this autumn – in Brazil and Australia in spite of cost-cutting that has trimmed about €1,000 ($1,548) off each car.

EDITOR’S CHOICE
Brussels legal threat to VW law - Jun-04Rethink of ‘VW law’ insufficient - Apr-10Bentley to take 27.9% holding in HR Owen - Mar-19European View: Car wars - Mar-12VW chief kills ‘world car’ dream - Mar-14Weak dollar puts brake on Volkswagen in US - Mar-05The Golf is central to VW’s future and its self-proclaimed aim of trying to catch market leader Toyota.

But the US market has proved a disaster for VW recently, with losses in the billions of euros as a mixture of the weak dollar and poor products has hit hard.

VW is planning to build a new factory in the US to open in 2010 or 2011, with a final decision probably due next month. This plant is intended to produce a new mid-sized saloon similar to the Passat to sit alongside VW’s smaller Jetta saloon, which is manufactured at its Mexican factory.

VW managers said it was possible the Golf – known as the Rabbit in the US – could be produced at the new US factory. But until that point, sales were likely to be halted in the US. VW intends to continue selling its high-end version of the Golf, known as the GTI in the US, to protect its image.

VW said it aimed to make a return on sales of 8 per cent over the lifecycle of the Golf – expected to be about six to seven years – but only about 5 per cent during its introduction. It declined further comment.

VW managers said Martin Winterkorn, the chief executive, overhauled the Golf with many new touches having been unsatisfied with his predecessor’s work. “That made the car in many areas more expensive, but he thinks he can sell it for more money,” a manager said.

The current generation of the Golf has proved a financial problem for VW from the outset, when the carmaker had to resort to incentives just to sell it. The model has only recently started to be profitable.

VW is struggling with many of its models in the US but continues to sell some to maintain its image there, such as the new Tiguan small sports utility vehicle and others, such as its bigger Touareg 4x4, because the margins are so good. However, its goal of overtaking Toyota is all but impossible without more success in the US.

VW aims to triple its US sales to 1m by 2018, including sales of its Audi luxury brand. It is considering introducing models such as pick-ups and mini-vans, but some experts worry these could come at the wrong time given high oil prices.

Mr Winterkorn told the Financial Times this year: “Maybe we will even have to build the Polo [one of its smallest cars] in the US or smaller

Wonder what role advertising or lack thereof plays. VW's recent ads don't do much for me.
I owned a 65 bug as a teen, later a Westfalia camper as a dad with two small kids. Good products. Europe loves VW. Not sure how VW has missed the mark in the US market so badly.
With $4 gas, you would think this would be their year... :confused:

I like a number of their current models, nice to drive and look at. That said, they have had their quality issues of late. Moreover, because they don't produce cars here, the exchange issue has really impacted them.

Perhaps a nice plant in CA.

Sure, businesses love being here, right?

With gas at $4 / gal and the media wanting / predicting $5 / gal by July 4, let's examine VW's marketing plan....

Step 1 - Discontinue the fuel efficient Golf / Rabbit in the US mkt. Can't sell any because of the weak dollar.

Step 2 - Introduce a small SUV. They'll call it the "GTI of SUVs". I searched the Net for mpg estimates but couldn't find any. Bet it doesn't get great mileage.

Step 3 - Move into the pickup and minivan mkt. That's where the big profits are. True today but how about in the future? In today's economy, there's not going to be a lot of action in the pickup mkt. The Big 3 and Toyota will be cutting each other's throat trying to move these monsters. VW thinks it can muscle in and take a piece of the action?

And they wonder why they aren't making money? Their product planners must be smokin crack.

this is tragic.

in the 80s, they had a 50+mpg rabbit. and look at where we are now. nothing better in the US.

screw the prius. most anything VW markets in europe would kill the prius.

they need to hurry up and get the diesels out here. why did vw/audi run the R10 with diesel, with no diesels avail in the US?

And now, the jetta diesel cup, and no diesel jetta available right now?

bring us the smaller cars, open a plant here, and kick some toyota @ss!!!

I WANT A VAG DIESEL!!!! make mine the 3.0tdi. although i might get a 1.9tdi for a commuter as well.