Volkswagen’s Next Task: Change Way Americans Picture Brand

DETROIT – The brand once defined solely by its bug-like people’s car and flower-power microbus dedicated a perhaps unprecedented amount of its exhibit floor space to trucks at the just-concluded North American International Auto Show here.

The centerpiece of this year’s Volkswagen stand was the new CrossBlue midsize cross/utility vehicle concept that appears bound for production in 2015.

But also given prominent play were the sporty CrossCoupe CUV concept originally unveiled at the 2011 Tokyo auto show and R-Line performance versions of the production Tiguan and Touareg CUVs introduced at the NAIAS for the ’14 model year.

The positioning was no accident. Volkswagen of America officials are intent on broadening consumer perception of the brand beyond cars, as they set out to achieve a more than doubling of sales in the U.S. to 800,000 units annually by 2018.

Focusing the bright lights on CUVs is the latest step toward meeting that goal.

“Most people, when they think of VW, think of our passenger cars,” Tim Mahoney, VWA’s chief product and marketing officer, tells WardsAuto in an interview. “They think of Jettas. They think now more and more of Passats. They think of Beetles. Historically, they think of microbuses.

“But Tiguans and Touaregs don’t spring to mind,” he adds. “It’s important to really have this perception of (offering) a full line.”

Without persuading buyers to connect CUVs and VW, achieving the 2018 targets would be impossible, Mahoney admits. The Middle CUV sector is one of the fastest-growing and largest vehicle segments in the U.S., with sales up 12.6% to 2,240,064 units in 2012, according to WardsAuto data.

“If we really wanted to stop at 300,000, 400,000, maybe even 500,000 vehicles (in annual sales), it probably could be done just with cars,” Mahoney says. “For us to continue to grow (beyond that), we have to push in that (CUV) direction.”

The CrossBlue will be Volkswagen’s big play. Although executives aren’t committing to production, the model looks likely to be added into the mix at the auto maker’s Chattanooga, TN, assembly plant in the next two years.

Bigger than the Touareg, it would be lower-priced than that model, with more of an accent on utility and people-hauling than out-and-out performance and luxury. Think of it in part as a replacement for the Chrysler-built VW Routan minivan, which ended production in July.

“There are people, that as their life-stage changes and they need a larger vehicle, maybe they would not want to be in a minivan but (still) want 7-passenger capability,” Mahoney says, adding he believes a model such as the CrossBlue would represent incremental sales for the brand.

“It doesn’t compete really with anything we have,” he notes. “That’s always the trick, right? To keep the product portfolio in a way that it’s a series of building blocks. That’s really how it all fits together.”

Meantime, VWA officials are bracing for what could be a bit of a speed bump in 2013. After 35.1% sales growth last year, driven mainly by the new Passat and revamped Beetle, volume gains may be a bit tougher to come by this year.

There’s some new product in the pipeline, including the recently launched Beetle Cabrio and Jetta Hybrid, but the next major new-model introduction won’t come until first-half 2014 when the next-generation Golf begins arriving in the U.S. from its new production location in Puebla, Mexico.

“I think we come into this year with solid momentum,” Mahoney says. “We see an opportunity to continue to penetrate the segments we’re in. There’s enough product news to keep the story going.”

But volume increases on a par with 2012 will be difficult, and managing expectations inside the company will be among this year’s biggest challenges, he agrees.

“When you think about growth, 25%-35% (is) massive,” Mahoney says. “So at some point, that becomes moderated.

“But clearly there’s a desire in Germany to continue to grow in this market. So the eyes are on us, you could say.”

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