|Quote, originally posted by peter m. delorenzo »|
|Has VW become irrelevant in the U.S. market? |
Detroit. As Wolfgang Bernhard gets his rock star welcome from the adoring media this week in Germany at the Frankfurt Auto Show, he made it clear that he is applying the same formula at VW that he used to such great effect at the Chrysler Group in Detroit with his pal Dieter Zetsche - cut costs, accelerate the development of new, edgier models and improve quality. And since those two executed that formula so expertly over here on Chrysler's behalf, there's no reason to believe that Bernhard won't work his magic for VW too.
But VW isn't Chrysler (which some would argue is a very good thing) and I have some deep doubts that a "miracle" is capable of occurring for VW in this market. Why? Let's forget the VW legacy from the '60s and the whole Beetle nostalgia trip thing for a moment, because the game has changed in the U.S. and I'm not so sure VW is equipped to compete.
VW almost single-handedly ran its brand into the ground in this country in a series of missteps that would have been comical - if they weren't so painfully true. After reinventing themselves as a youthful brand a few years ago with a hip ad campaign complete with hip, ubiquitous sound track, they were wildly successful at drawing young buyers into their fold - and VW became cool again literally overnight.
But there was one huge problem with that burgeoning marketing success. After luring the young buyers in, VW managed to unleash a series of quality problems on their cars that proceeded to turn those same buyers off - driving them away from the brand in droves and into the waiting arms of such other auto companies as Toyota, Honda, Nissan, Hyundai, Kia and Subaru. For many of these buyers, their sour ownership experience with VW was the end of the innocence - and they would not trust their money again based on a flashy ad campaign or marketing pitch. VW had blown a golden opportunity.
But the ineptitude didn't stop there, because Ferdinand Piech, then VW's chairman and now chairman of the all-powerful VW Supervisory Board, decided that what VW absolutely needed more than anything else in the world was to go up-market and compete with Mercedes-Benz and BMW in the U.S. and around the world. This of course flew in the face of its own premium Audi division in the U.S., for starters, but Piech would not be denied - and he committed countless company resources to the task, which in turn had the effect of taking his company's collective eye off of the ball.
The result? Besides the worldwide sales disaster that the VW Phaeton became, VW dropped the ball on its mainstream products. The 5th generation Golf received a tepid response from the ordinarily gaga German driving public and for the first time ever VW was forced to offer the car with incentives in its home market. On top of that, all of VW's newly revised passenger car products - the Golf, Jetta and Passat - would be as much as two years late in getting here, which had VW's U.S. dealers a****ectic. All of these things may have been able to be dealt with in the old days of VW, when it was the attractive "alternative" German import on the American scene. But that was many moons ago. Now VW finds itself fighting against a horde of Japanese and Korean competitors for shelf space in the U.S. market, not to mention the domestic manufacturers, BMW and even its own Audi division.
And when it comes down to it, what exactly is VW's raison d'etre these days anyway?
Is VW the attractive "alternative" import choice for America's car buyers? Not any longer. There are so many car companies fighting for that role now VW is getting lost in the shuffle.
Is it the "premium" yet affordable imported brand? The short answer? No. Car companies are lining up to play that part in the U.S. too - and VW is not only operating at the high end of the pricing in this segment, it finds itself being just another player in an overly crowded field.
Is VW a performance import brand? No, it can't claim that persona either. It has only dabbled with performance over the years and only sporadically too (GTI anyone?).
In the end, VW has danced around the affordability threshold for years with diminishing success. It hasn't pursued developing a performance persona that had any lengthy, consistent credibility. And it's finding that its role as the hip, premium, German alternative brand is being usurped by any number of new (and old) players in the market - including Audi at the lower end of the premium segment with its new A3.
Whether it's the counter-culture '60s persona or the hip wheels of-the-moment that it occupied for a nanosecond - the "old days" will never return for VW. There are too many excellent Japanese and Korean contenders either already in market or on the way - and even the U.S. manufacturers are getting deadly serious about competing in the car business again.
VW can't compete on price, it hasn't exactly set the world on fire with its design and engineering prowess and its quality reputation has left a bitter aftertaste in the mouths of thousands of former owners who won't be back.
VW has floundered and flailed about in the U.S. market for so long now that even they don't know what they stand for anymore.
Taking all of that into account, there may be only room for one premium German alternative that isn't a BMW or Mercedes-Benz in this market - and Audi seems much better equipped to fulfill that role than VW does.
And no matter how many hot new products Wolfgang Bernhard comes up with over the next three years, it may not be enough to move the needle in VW's favor.
Thanks for listening, see you next Wednesday.