In an all-out push to achieve its highly publicized goal of becoming the largest automaker in the world by 2012, Volkswagen AG is preparing for a major push in the U.S. market.
According to the company’s executive vice president of group communications for Volkswagen Group of America, Tony Cervone, a key component of the push will be to take full control of Porsche’s automotive business. VW CEO Martin Winterkorn called the move “one of the most significant projects in the automotive world,” and said, “Together we are more capable than ever of becoming the best auto company on the planet.”
Cervone concedes that VW has “underperformed substantially” in the U.S. market, despite recent sales gains; particularly of the Passat and Jetta sedans, which have been significantly re-engineered to reduce production costs, and increase their appeal to American consumers. Production of the Jetta has been moved to Mexico and VW invested $1 billion it its Chattanooga, TN production plant which builds the Passat sedan.
Cervone said, “We now have products that are German-engineered, but are more affordable” than comparable models from BMW and Mercedes-Benz. Still he admits the company needs “more core products.”
In the U.S., VW is on track to sell 575,000 vehicles this year. CEO Winterkorn has set an annual U.S. sales goal of 1 million vehicles by 2018. The majority of those sales (800,000) are expected to come from VW-branded vehicles, with Audi-branded models expected to make up the difference.
VW has made significant gains in China in recent years. Last year China sales accounted for 27 percent of VW’s 8.27 million global sales. Sales in the U.S. accounted for only 5 percent of the total and Winterkorn is determined to double that figure by 2018.
In addition to bringing Porsche completely into the fold, VW plans to increase the annual production capacity at its Chattanooga plant to 500,000 units and to add a number of new models to its U.S. model lineup. The automaker also plans to expand its U.S. sales network.
IHS Automotive Consulting managing director Michael Robinet says another hurdle will be changing the current mindset of many VW dealers. Robinet says, “They need to think past just being a lower-volume, boutique manufacturer and move into the larger game.”