Volkswagen Scraps Current Microbus Project

Volkswagen AG has announced that they have decided not to pursue the current direction with the planned retro-styled Microbus due to costs and market conditions. With the Microbus being primarily targeted at a highly competitive and price sensitive minivan market in the US market Volkswagen is finding it difficult to price the Microbus competitively. The Microbus was planned to be built in Hanover, Germany on the T5 Eurovan platform which further added to the high costs of production. Most minivans in the US market are built on car platforms where shared components can keep costs low and give consumers a vehicle with more car-like characteristics. Volkswagen’s decision to build the Microbus on a commericial truck platform in Hanover was driven primarily by a labor agreement which put the project on uneven footing from the onset.

At this point in an effort to try and keep the labor agreement intact, VW has announced that they plan to still build some type of van with “emotional” styling that can be sold in the U.S. and in the European market giving the vehicle a broader market base. Volkswagen isn’t disclosing a lot of details about this “new” van, but has clarified that it won’t be a retro-styled Microbus as pictured above. Will Volkswagen offer something like the current T5 Eurovan again or will it be more similar to the Sharan sold in Europe. Time will tell as VW has committed to bringing the vehicle to market in 2007.

The Germany press release follows below:

Wolfsburg/Hanover, 19 May 2004 – The Board of Management of Volkswagen AG decided on Tuesday evening to change the concept for the planned Microbus. The new model with its innovative design is scheduled to go into production in Hanover in 2007 and will not only aim for the US market but will also be geared to other markets.

With the decision, the Board of Management under the chairmanship of Dr. Bernd Pischetsrieder has made a commitment to the Hanover plant and the planned Microbus production. The model is being given a new orientation since an exclusive focus on the US market would have jeopardized the success of the Microbus, particularly in view of the continuing unfavourable exchange rates and market conditions. Pischetsrieder emphasized: “Our decision secures worldwide success for the Microbus.”

The new Microbus will be built in Hanover from 2007 based on the modular strategy principle. A larger number of components from the new T5 will be used than foreseen by the original design. This will result in noticeably greater synergy effects. The design will be characterized by an emotional styling language and an ambitious space concept.

Following an intensive dialogue between the Board of Management and labour representatives at Volkswagen Commercial Vehicles, both sides agreed that Volkswagen will continue with the planned implementation of the 5000 x 5000 collective bargaining model in Hanover in spite of the delay in production start-up. This was underscored by Dr. Peter Hartz, Member of the Board of Management for Human Resources, on Wednesday. On the basis of present plans, 1,500 new jobs will be created in Hanover to produce the Microbus under the innovative collective agreement.

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