VW Set to Launch Brand-Rebuilding Campaign

DETROIT – Volkswagen of America Inc. will launch a new advertising campaign this spring, as it looks to reestablish its brand in North America and reach 800,000-unit sales by 2018.

One of the first television ads in the campaign, dubbed “Das Auto,” is unveiled at the Automotive News World Congress here by VWA President and CEO Stefan Jacoby, who says repositioning the VW brand in order to “resonate and reconnect with American drivers,” is one of the “five pillars” of the auto maker’s U.S. comeback plan.

Other key pieces of the VW strategy to nearly quadruple sales here include offering a broader, more American-focused product lineup; improving quality; boosting the performance of VW’s U.S. dealer body; increasing overall management efficiency; and establishing local production – including capacity for engines and transmissions.

“Let me be clear about this,” Jacoby says of VW’s sales targets. “This is an ambitious goal. With the current exchange-rate issues and the difficult economic environment, it increases the challenge.

“(But) we are committed to the U.S. We’re here not just to stay but to grow.”

The new Passat CC 4-door coupe rolled out at the North American International Auto Show last week is the first new model targeted squarely at the U.S. market. VW will add to that with the launch of its new Chrysler Town & Country-derived minivan to be unveiled at the Chicago Auto Show in February and by offering a diesel for its Jetta compact car. However, there will be no VW pickup truck for the U.S., Jacoby says.

Jacoby: Powertrain production must be part of any U.S. plant plans.

The new TV ad emphasizes the brand’s German engineering and offers a nostalgic look at how Americans connected with their VW cars in the past. But Jacoby says the brand-rebuilding campaign “is not just Baby Boomer nostalgia,” reminding VW currently has one of the youngest buyer demographics in the industry.

As for quality, Jacoby says VW already has gained some ground on a promise it made to dealers 18 months ago to do better in initial quality survey ratings. He predicts complaints per vehicle after 12 months of ownership will drop to 0.8 in 2008, down from 1.39 in 2004.

Jacoby also points to product changes VW has made on the fly in response to criticism from owners. Cruise controls were redesigned after buyers said they found them difficult to operate, and pedals in the Jetta were repositioned after the auto maker received complaints they were too close together for size 12 feet.

In addition, Kelley Blue Book ratings on residual values put the Rabbit, Jetta and Eos at the top of their segments and position VW as the best brand overall, Jacoby notes.

Dealer showrooms won’t have to be added until VW sales top 450,000 units annually. “In the medium term, we’re not concentrating on enlarging, we’re concentrating on strengthening,” he says.

More throughput per dealer and more standalone showrooms, where profitability tends to be the greatest, are part of the agenda, he indicates.

VWA also is restructuring to be more effective and efficient. Field staff now are empowered to make decisions to improve quality and dealer profitability. Jacoby also singles out the new management team he has put in place, including Chief Operating Officer Mark Barnes, product head Toscan Bennett and marketing chief Tim Ellis.

“The human element is what brings the strategy to life.”

Jacoby sheds no new light on VW’s potential for U.S. assembly capacity, reiterating that any facility will have to incorporate state-of-the-art technology and build a volume product for the U.S. It also will need to be located in an area where it can be best served by local suppliers, Jacoby says, refusing to confirm reports North Carolina is the leading contender to land the facility.

However, he does say powertrain production must be part of the package.

“If we don’t localize our engines and transmissions, then we can’t be competitive,” he says. “So our main engines will have to come from a dollar region as well.”

A decision will come in the next few months, and Jacoby says it would take about three years to go from green light to production launch.

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