German automaker, Volkswagen AG, will increase the size and reduce the price of its Jetta compact car. Volkswagen has set a goal of nearly doubling its fleet-wide sales in the U.S. by 2012 and the Jetta is a key component of the company’s strategy. The Jetta is currently Volkswagen’s best-selling vehicle in the market.
The new Jetta will be approximately 3.5 inches longer than the current model and will sell for about $1,700 when it goes on sale in October.
The CEO of Volkswagen’s U.S. unit, Stefan Jacoby, said the automaker also plans to shift more of its Jetta production to its North American facilities to lower costs and make it more competitive with small cars from Toyota Motor Corporation and Honda Motor Company, which are its chief rivals. VW has set a sales goal of 400,000 sales in the U.S. by 2012, compared with 213,454 sales in 2009.
Appearing at a press briefing in New York yesterday Jacoby said, “Model by model, our lineup will be competitively priced so that we will be able to compete in the American market with our products.”
By shifting more of its production from Europe to North America, Jacoby said VW will reduce costs and insulate itself from currency fluctuations. He also said the company hopes to increase its North American production to 75% of market sales by 2013, up from about 60% in 2009.
By 2012 or 2013, VW hopes to be completely unaffected by the euro-dollar exchange rate and Jacoby predicts its U.S. business will be profitably by then. He declined to say how much the business lost in the U.S. last year. Volkswagen reported global profits of $1.17 billion in 2009.
Jacoby said VW will price the 2011 Jetta at about $16,000 in the U.S., down from its current base price of $17,735. Starting prices for the Honda Civic and Toyota Corolla are currently $15,455 and $15,450 respectively.
J.D. Power & Associates’ executive director of global forecasting, Jeff Schuster, said Volkswagen is going after big-volume products.”
Through May of this year VW reported 46,173 Jetta sales in the U.S., up 27% compared with the same four-month period in 2009. U.S. sales of the Corolla and Civic rose 17% and 9.9% respectively during the period.
Schuster said the 2011 Jetta is “more refined from a styling standpoint, like it’s grown up a bit” and speculated that the combination of lower price and restyling “should provide some lift to sales.” He said J.D. Power is “fairly bullish” about the automaker’s future sales prospects, even though its estimate is lower than Volkswagen’s 2012 forecast.
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