For a number of years, people have been saying the biggest problem with Volkswagen is they haven't “figured out the American market yet.” Even the automaker admits that it's the reason that its market share has dropped. Volkswagen has tried again and again to make some inroads into the market to no avail. But the German automaker is giving it another go.
Automotive News had the chance to do a deep dive into Volkswagen's new plan by speaking with Volkswagen Group of America CEO Hinrich Woebcken. His plan involves turning this division into an American car company - in spirit. It should be noted that Woebcken came to the U.S. as an exchange student in the seventies, something he credits for getting him interested in industrial engineering.
"I owe America, I owe Rochester, N.Y., and I owe this metal shop for how I basically went to start my adult life. We want to get more Americanized not only in our product but in our business. It's not that we're giving up on the genes of the Volkswagen brand. Volkswagens are Volkswagens. But what we recognized over the years is ... that we were too much a small-car company, too much a sedan company," said Woebcken.
This plan was sparked only a couple months into his position as Volkswagen America's CEO. During a meeting with dealers, Woebcken was introducing the three-row crossover that is now known as the Atlas. But at the time of the meeting, it was wearing the Teramont name. Dealers hated the name and wanted to have Atlas as the name. Woebcken agreed to talk with his bosses about changing the name.
"Everybody said there was no chance to convince headquarters to change the name of a regional product. It's not a big thing, I know, but it's a symbolic statement that Wolfsburg said, 'OK, the region is independent. They want to make sure the brand is getting successful in this country. Let them decide for themselves the name,' " explained Woebcken.
"It was, in terms of Volkswagen, a pretty big thing that demonstrates ... that this is really an independent company here in America, that the factories report to us, the engineering centers in California and Detroit report to us, the purchasing organization — which is a big leverage for the cost situation — is reporting into the North American region, plus, of course, all the sales and marketing. So we really have all the levers in our hand now, not only to listen to the demands of the market, but really also to implement them."
Some of the parts of Woebcken's plan have come to fruition including cutting the prices on various models like the Tiguan and introducing a new 6 Year/72,000 Mile warranty.
Other parts of Woebcken's plan include,
- Shortening Volkswagen's long product cycles with plans to “introduce two new cars every year” to North America
- Localize part sourcing for their two North American plans in Chattanooga, TN and Puebla, Mexico
- Roll out Volkswagen's electrification strategy beginning in 2020 with the I.D. Crozz
It is an ambitious plan but it seems to be paying off somewhat. Sales in 2017 rose 5.2 percent. In 2018, sales are up 5.8 percent.
We highly recommend checking out this piece by Automotive News as we are only scratching the surface.
Source: Automotive News (Subscription Required)