VW Says U.S. Inventories in Good Shape for Final Quarter Sales Run

Volkswagen sales slipped 4.5% in the U.S. in September on a daily-rate basis compared with year-ago, but executives say the brand could report its best market share of the year, depending on the strength of the rest of the industry. WardsAuto earlier predicted a 7.3% drop in industry sales for the month from August levels.

U.S. officials also warn not to read too much into rising incentive spending in September, saying the higher spiffs are a result of having to clear out ’13 models and that VW dealers are in good shape with inventory heading into the year’s final quarter.

Industry sales were expected to take a dip from the previous month as a result of reporting practices that saw Labor Day weekend sales recorded in August this year, rather than in September as is typical.

“There was a bit of a (Labor Day) hangover compared with what we saw prior-year,” notes Mark McNabb, chief operating officer, Volkswagen of America. “We had 23 selling days and four weekends vs. 25 selling days and five weekends the previous year.”

For the month, VW delivered 31,920 vehicles in September, down 12.2% by volume from year-ago’s 36,339. While several models posted double-digit percentage volume drops, most were outgoing models, such as the Golf, which will be replaced by a new-generation car next year.

Many remaining core models performed better, with Beetle sales up 47.3% and Jetta down just 1.9%. Tiguan again posted a strong month with best-ever September results up 18.8% from like-2012. Passat sales fell 9.6%, but executives say demand remains strong, and the Chattanooga, TN, plant that builds the sedan is slated for overtime this week, according to WardsAuto/AutomotiveCompass forecast data.

VWA’s overall incentive spending, including its Audi and Porsche brands, jumped 19.5% over year-ago to $2,530 in September, according to TrueCar. That compares to a 0.6% decline in the industry average to $2,382.

McNabb doesn’t confirm the figures but says current incentive activity isn’t indicative of the spending levels anticipated for the remainder of the year.

“If I look at what’s going on in the industry, we’re seeing inflated numbers coming out,” he says. “You’re seeing numbers climb for all manufacturers and makes as they sell down their model-year ’13s. The ’14s have come out with relatively little incentive dollars on them.

“We feel we’re in really good shape on ’13s,” McNabb adds. “We’ll have more ’14s in inventory beginning this month than ’13s, which is a big move for us. So we feel good going into the last quarter on the incentives. The pressure isn’t there on the inventory that might have been.”

The VWA executive says it’s too early to tell if the U.S. government shutdown will have a negative effect on industry sales.

“At some point it will have an impact,” he says. “We’re hearing from dealers in heavily dependent areas that they saw traffic decline over the weekend. I went out and visited a couple of (Washington-area) stores over the weekend, and we definitely saw lower traffic in those stores than what they’re used to.”

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