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NINETY EIGHT REGENCY

VW’s recipe for disaster.

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VW’s recipe for disaster.

By Peter M. De Lorenzo

(Posted 9/13, 2:00PM) Detroit. With VW dominating the news of late with their grandiose pronouncements about selling 800,000 vehicles in the U.S. by 2018, the introduction of the reconstituted - and controversial - 2011 Jetta, a new plant in Tennessee that will build a new mainstream large sedan and the latest announcement of an ex-GM executive to take over the reins of its U.S. operations, it’s time to call a very large “time-out” and stop the madness.

We’ve been down this road before, folks, and it’s an ugly one littered with broken dreams, woefully misguided intentions and bone-headed thinking on a grand scale. Let me set the Way Back Machine for you to 1978, when once upon a time VW opened a plant at New Stanton, Pennsylvania - in Westmoreland County - and promptly announced that they would capture 5 percent of the U.S. market in no time. But in their zeal to “Americanize” their products to make them more appealing to us American-type consumers – and, of course, increase volume a ton – they unleashed a squadron of ex-GM manufacturing and product execs on their U.S. product plan and the results were, predictably, disastrous.

That it came at the height of the “color-keyed” interior phase - which had swept the U.S. auto industry like some sort of platform-heeled, white-suited, shimmering disco-ball plague – was no coincidence, and the “Americanized” Rabbits that were released on the unsuspecting public were absolutely horrific by every measure.

Massaged by the ex-GMers who didn’t have a clue as to what the VW product image used to be about, the Westmoreland Rabbits were forgettable and bland on the outside and shockingly garish on the inside. (If you made the unfortunate decision to get one at the time and happened to order a blue interior, you not only got a sickening shade of sky blue, but every surface, corner and crevice was sky blue, too, including the steering wheel, seatbelts, shift boot, absolutely everything. The only thing that wasn’t color-keyed was the panel surrounding the instrumentation, but that’s only because they couldn’t figure out how to get it done back then.)

Combine that with the fact that the Americanized Rabbits were dumbed-down and softened up in ride, handling and feel, and you had a recipe for disaster. VW damn near killed themselves in the U.S. market for good with this little episode, and it was only when they pressed the re-set button for the brand by bringing out the GTI in 1983 that VW saved itself from its own serial incompetence.

But I digress.

Fast forward to today. Jonathan Browning, an ex-GM executive who joined VW in June, has replaced Stefan Jacoby, who high-tailed it to Volvo a couple of months ago when China’s Zhejiang Geely Holding Group – which bought Volvo out from Ford – came calling. Browning has solid credentials, etc. - including a nine year sales, service and marketing stint in Europe - and No. 1 on his agenda will be to make VW’s new billion dollar plant in Chattanooga, Tennessee, a winner, so that they can reach their stated goal of 800,000 sales a year in this market by 2018.

(A laughable, almost mythically surreal number by any measure, by the way, but that’s the number VW has been tossing about for months now so I fully intend on reminding them of the folly of it all every chance I get, because it’s almost triple VW’s current sales. And, while doing that, the VW Group intends on doubling the U.S. sales of its Audi brand to more than 200,000 a year. The Audi number I can actually believe. The VW number? It’s Pure. Delusional. Fantasy.)

Now as for that grand VW Group market strategy that has been handed down to Browning - and that he will have to execute to the letter – the first order of business is to reposition the new VW Jetta down-market a bit in terms of price, in preparation for the new mainstream Accord-sized sedan that’s coming from Chattanooga.

But VW has set about doing this in the most cynical way imaginable. On the outside, the new Jetta is bigger and has more rear legroom to pique shoppers’ value-oriented interest. (It also happens to be bland as cold white toast minus the butter design-wise - which to me is absolutely unforgivable in this day and age - but that’s another rant for another day.) Inside the new Jetta reeks of cost-cutting everywhere (get a complete rundown of VW’s cost-cutting hatchet job by reading Dan Neil’s excellent piece in last Saturday’s Wall Street Journal), with the use of lower grade materials in some very conspicuous places.

But VW didn’t stop there, oh no.

VW also did away with the independent rear suspension, replacing it with a cheaper torsion bar set-up - which is a red flag to euro-centric driving enthusiasts everywhere - and a blatant example of classic “they’ll never know the difference” old-school Germanic auto executive arrogance in full bloom. And in a unconscionable abdication of street cred, VW product planners and cost cutters even went so far as to replace the rear disc brakes with a drum brake set-up on the standard model, the modern day auto equivalent of replacing the steering wheel with a pair of reins.

Now, am I saying that the new Jetta is a bad car? Of course not, because it will most certainly be a “serviceable” entry in the segment. But “serviceable” doesn’t cut it in this day and age and “serviceable” certainly isn’t consistent with VW’s brand image in this country, or at least what's left of it. And besides, if they’re going to these great lengths to cheapen the Jetta, what’s in store for their mainstream entry that’s yet to come?

VW made a name for itself around here – and this continued long after the Beetle heyday too – as the brand for enthusiast consumers who wanted to get a little piece of the European driving experience for themselves at a somewhat affordable price point. The fact that VW seemed to march to a different drummer at times and went their own way - away from its U.S. and Asian counterparts in the market - more often than not helped their cause. After all, that quirky iconoclasm worked for the brand in the U.S. almost from the day the first Beetle arrived here.

But the picture of the “new” VW market strategy that’s emerging here has “train wreck” written all over it. Chasing volume while squandering brand image along the way has always worked out to be a giant bowl of Not Good. This industry is littered with examples of once bullet-proof brands doing exactly that to an inevitable bad end. (And Mercedes-Benz is only the latest example of it.)

Aim your products at the lowest common denominator, “I just need transportation” part of the market long enough and as a manufacturer you will become that lowest common denominator in no time.

VW is making a cynical play in this market to increase volume by counting on the fact that consumers not only won’t care whether or not they’re churning out bland-tastic forgettable mobiles, but even worse, that they won’t know the difference.

Big, big mistake.

As I’ve said many times before, mediocrity in the auto business isn’t bliss, it’s just mediocrity. And attempting to be all things to all people is even worse. Throw in classic, old-school Germanic “we know what’s best for you and you will like it” auto arrogance into the mix while creating cheap-ass, dumbed-down VWs, and it’s a recipe for flat-out disaster.

And that’s the High-Octane Truth for this week.

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