VW Sticks With Sales Goal

A recession that has rocked the auto industry isn't causing Volkswagen of America Inc. to readjust its ambitious plans of selling 800,000 vehicles annually in the U.S. by 2018.

The auto maker set that target last year, and “despite a tough economy, we will not waiver from this goal by one inch,” VWA President and CEO Stefan Jacoby says during the unveiling of refreshed compact Golf and GTI models at the New York auto show.

Jacoby cites “significant strides,” including plans to build a plant in Chattanooga, TN, where production is scheduled to begin on a new midsize sedan in 2011.

“With the plant, we are making a $1 billion investment in the future,” he says. “That's how confident we are in the American economy. That's how confident we are about Volkswagen's future here in America.”

VW's determination is stirring industry buzz, with even mighty Toyota Motor Corp. reportedly looking over its shoulder, as R.L. Polk suggests Volkswagen may pass General Motors Corp. as the world's No.2 auto maker.

GM is expected to suffer a 31% drop in production this year, while VW likely will see only a 15% decrease, Polk said in a statement this week.

As with every other brand selling in the U.S., except for Subaru (which saw a fractional gain), VW sales dropped in 2008, compared with 2007, as the financial crisis deepened and credit froze up.

VW and its Audi luxury-brand division sold a combined 310,888 units in 2008, compared with prior-year's 324,080, according to Ward's data. VW-brand sales accounted for 223,127 units in 2008 and 230,572 in 2007.

“But the encouraging news is we increased market share in this country by 20%,” Jacoby says. “And in the first three months of 2009, we kept market share of 2% (for the VW brand). That means we will be ready for takeoff when the U.S. economy rebounds — and we all know it will.”

Worldwide, the German auto maker saw record sales of 6.2 million units in 2008 and reported a double-digit return on investment for the first time in its history.

“But all indications are that this year will be much, much more challenging,” Jacoby cautions. “We do not expect to match the gains we made in 2008.”

Still, he speaks of momentum, as VW keeps its eye on the 800,000-unit goal it hopes to reach for the VW brand in nine years. “In today's tough economy, the word ‘momentum’ may seem strange for an auto maker,” Jacoby says. “But for Volkswagen, we believe it is an appropriate term.”

He cites the launch of five new vehicles last year, including the acclaimed Jetta TDI, which was named “Green Car of the Year” at the Los Angeles auto show. Its diesel engine was among Ward's 10 Best Engines for 2009.

VW is introducing three more models this year: the upcoming clean-diesel Touareg TDI, as well as the debut here of the sixth-generation '10 Golf and sporty GTI performance version. The Golf is the brand's best-selling nameplate with a 35-year run of 26 million units sold in 120 countries.

VW introduced the GTI, which Jacoby calls “the original pocket rocket,” to the U.S. market 25 years ago.

Neither the new Golf, which shares the TDI engine, nor the GTI, have undergone major restyling. VW design chief Klaus Bischoff speaks of cosmetic changes, such as “a more-defined front bumper” on the GTI, and the desire to retain the historical DNA of the original Golf.

“They are not ‘oh-my-God’ redesigns,” says Steve Keyes, VWA's public relations director. “The previous models have been extremely well received, so there was no need for revolutionary changes.”

VW's sales goal in the U.S. also depends on its dealers, most of whom are exclusive to the brand.

Many of VW's 580 U.S. dealers have invested in new facilities or facility upgrades, Jacoby says. “These dealers smell opportunity.”

VW has no plans to “dramatically increase” its dealership count, but there are some open spots to fill here and there, he says. “We think 600 dealers is a good number.”