Root, Root, Root for the Bug--Designers should pray for new Beetle's success

Auto companies get second chances. Just when everything seems over, a new design arrives and, whammo, the company is back in the game.

I've seen it happen time and again: American Motors was almost out of business when the "compact" Rambler rolled in. And in the late 1950s, Pontiac was an "old man's car" and had sunk so low that General Motors considered dumping it (yes, Pontiac).

Too long ago? How about Chrysler, saved by the K-Car.

Of course, its not just a car. There are inspired leaders, too: George Romney, crusading against "the gas-guzzling dinosaurs" and saving AMC; Lee Iacocca wrapping himself in red, white and blue telling people that if they could find something better than his K Car, to go ahead and buy it. And Bunkie Knudsen pulling the Indian head emblem off those Pontiacs and putting them on the stock car ovals and saving the division.

Another such miracle could occur with Volkswagen here in America (see World Wrapup p.14).

VW is the leading carmaker in all of Europe, and in Brazil and China, too. But VW has been in a steady decline in America for a quarter-century.

If they don't get it right this time, another disastrous quarter-century might pass. It won't be easy. In fact, I think the odds are against VW.

n The dealer force is next to dead.

n The press, or Consumer Reports, eventually will say the New Beetle is an ego trip and no bargain, and that for $17,500 you can get lots more car: a Honda Civic or a Saturn.

n Then we've got to see if the Mexicans can build it on time, in volume and with high quality. Remember a couple of years ago the quality was so bad that VW had to shut the Mexican factory for almost a year.

Those problems make for serious odds against a VW recovery. Yes, VW has a couple of excellent cars, the VW Passat ($22,000 to $30,000) and the Audi A6. But they run against the toughest competition, from the Japanese, Detroit and other Germans.

As for the New Beetle, that's the biggest question in automotive history. No one has ever spent $400 million on nostalgia.

The head of VW in Germany, Ferdinand Piech, is a take-no-prisoners kind of guy. He has ordered 20% to 25% sales increases here in the U.S. every year up to 300,000 units (from 172,000 VW/Audi sales last year). If he doesn't get it, you can be sure that heads will roll in Auburn Hills, MI, VW's U.S. headquarters.

But don't think he will stop at 300,000. I've heard Mr. Piech talk about 700,000 sales a year. He pretended he was joking. I don't think he was joking. Remember in 1968-1971 VW sales ran past 500,000 and approached 600,000.

I really want the New Beetle and VW to succeed, and not just for old time's sake. We are just coming out of a period of boring, wind-tunnel look-alike design. Suddenly designers are daring again: Ford's Ka; Mercedes' A Class, Smart and SLK; Porsche's Boxster; VW's Passat and the Audi A6.

Some American cars are taking on new looks, too: Taurus, the new Chryslers, the new Mercury Cougar, Plymouth's Prowler.

But they aren't all successes. The A Class and the Smart had setbacks, the Taurus is no home run, and who knows about the new Chryslers?

If the New Beetle is a home run, it will shoot an injection of pure guts into the veins of designers around the world. Even auto executives who talk of "evolutionary change" will have to go along.

But if the New Beetle fails, the cause of exciting design could be set back decades. We could have an endless age of Oldsmo-bile Achievas.

That's why we all should pray for the New Beetle's success.

Let me tell you something else. The Old Beetle was good, but that wasn't all VW had when it made its mark here in the 1950s and 1960s. VW had some of the sharpest executives in the U.S. - first Carl Hahn, who later headed all of VW in Germany, and later Stuart Perkins, a Brit. They were the equal of our best, Ed Cole of GM and Chevrolet, and Lee Iacocca, then of Ford.

Those VW executives were behind the sharpest advertising ever. They built a dealer force with higher standards than we were used to seeing in those days. You might say they invented brand marketing in the car business.

VW also had what passed for a no-dicker-sticker. Most cars had a markup (called a discount) of about 25%, which means the sticker price was watered big, plus everything was optional back then.

VW's sticker price was real and there were few options. VW dealers ran honest prices while everybody else played games.

Plus, competition at that time in the small-car market was thin. The Japanese weren't here and the smaller American cars still were much bigger than the Beetle. The big challenger was the Renault Dauphine.

It's different now, and much tougher. Everybody builds good cars. Even with the New Beetle, the odds are against VW. Remember, if they don't make it, design-by-focus-group wins. Like I said, we'll see decades of Oldsmobile Achievas.

So everyone, root for the Bug!