It slices! It dices! No, we're not trying to sell you a set of knives. This is the best way to describe Volkswagen's strategy for the U.S.; price cuts.
Bloomberg reports that Volkswagen will be changing their strategy in the U.S. to become more mass-market in the U.S. This will mean a wider product range and lower prices. The hope is the strategy can reverse a downward spiral in U.S. sales that has been taking place before the diesel scandal broke.
Volkswagen for many hasn't been able to crack the U.S. market. Despite becoming the world's largest automaker in terms of sales this year and making up 10 percent of total automobile sales in Europe, Volkswagen has been a blip in the U.S. In the past ten years, Volkswagen has never gotten up to 5 percent of U.S. (At the moment, Volkswagen only makes up 1.7 percent of total U.S. auto sales). The German automaker has tried making the Jetta cheaper and making a Passat for the U.S., which hasn't gotten them anywhere. It doesn't help that Volkswagen has missed the boat with growing demand for crossovers in the U.S.
“Volkswagen is facing an uphill battle to revive the brand in the U.S. Volkswagen is struggling with the loser image of the past, and now in the present the brand is burned. They need a good story that assures people it’s really a new start. Just adding another SUV won’t do it,” said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen.
We don't think going for a mass-market plan is a good idea either at the moment. But who knows, it could be the thing that saves VW.
Source: Bloomberg
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