Volume No Longer VW’s Prime Target

DETROIT – New CEO Matthias Mueller sends his strongest signal yet Volkswagen no longer will make becoming the world’s biggest automaker its primary target.

Speaking here on the eve on the start of press days at the North American International Auto Show, Mueller says he is preparing a 2025 strategy for the German automaker that won’t make “volume a cherished goal.”

Mueller, who was named to the top spot at Volkswagen last fall when former CEO Martin Winterkorn resigned amid the automaker’s diesel-emissions-cheating scandal, says he will release the details of his 2025 plan this spring.

Winterkorn had made becoming the world’s biggest automaker by volume the cornerstone of his business plan for 2018, but that pressure to grow sales is being blamed as one of the key factors leading to the diesel-emissions scandal. Until now, it was unclear whether VW would continue to pursue that goal, however.

The 2018 targets included sales of 800,000 Volkswagens and 200,000 Audis in the U.S. Audi exceeded its mark last year, with record deliveries of 202,202 vehicles, but VW-brand sales slid 4.8% to just 349,440 units.

Mueller says VW’s global sales of 9.93 million units last year represented a “solid performance.”

“The comment Matthias Mueller made (here) is very, very important, that he is satisfied with the 9.9 million for the group,” says Volkswagen of America CEO Michael Horn, who appears relieved to see the 1 million-unit U.S. sales goal retired for now. “Because with numbers, there’s a short party, and (then) you might have a hangover afterwards.

“We have (new) models coming, our profitability has increased last year and we grow step by step,” he adds. “Size always matters in the U.S., but it is not the biggest priority for us right now.”

Horn says he doesn’t expect VW brand sales to rise in the U.S. this year, given the hold on diesel sales that accounted for more than 20% of its volume. “If we manage to keep the same level, I think we’re good,” he says.

In his speech Sunday night, Mueller reiterates VW’s commitment to continuing its investment in North America, where it will spend $900 million to launch production of a midsize CUV at its Chattanooga, TN, plant later this year. It also is investing in production of the Tiguan CUV at its Puebla, Mexico, plant for 2017 and will begin producing Audi Q5s at a facility in San Jose, Mexico, in mid-2016.

The CEO also says VW will focus on advanced mobility technology, undergo a group-wide “digitalization initiative” and roll out 20 more electric vehicles and plug-in hybrids by 2020.

Executives also promise to deliver a technical solution for VW’s defective diesel-engine vehicles soon, saying they are meeting with EPA and California Air Resources Board officials this week with the hope of finalizing a strategy.

U.S. officials have expressed dissatisfaction with the pace and transparency of VW’s efforts to solve the diesel emissions defects. The automaker says it has 250 diesel engineers in Germany working on solutions.

“We know we deeply disappointed our customers, the responsible government bodies and the general public here in the U.S.,” Mueller says. “I apologize for what went wrong at Volkswagen. We are totally committed to making things right.”

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