Sunday, April 20, 2014 · 4:57 p.m.

Volkswagen faces sales challenges


The seemingly abrupt departure of Volkswagen America CEO Jonathan Browning has brought the company's slowing sales into focus. 

And although Volkswagen America leaders said Browning was leaving for "personal reasons," some auto industry analysts said it's hard not to draw a connection between disappointing sales and Browning's exit. 

Volkswagen leaders declined the request for an exit interview with Browning. 

"[VW] sales only grew by 1 percent this year, while the rest of the industry grew 7 or 8 percent," Alec Gutierrez, senior analyst at Kelley Blue Book, said Thursday. "That has to be playing a role here." 

Nearly a year ago in January, leaders announced that—partly thanks to the locally made Passat—2012 was Volkswagen's best calendar year since 1973.

In 2012, Volkswagen sold more than twice the volume it did in 2009. 

Volkswagen leaders said they wanted to become the biggest automaker in the world by 2018 and that they wanted to sell 800,000 vehicles annually by that time. And they wanted to sell a total of 1 million cars in the U.S. by that time, as well.

Then in March, at the New York International Auto Show, Browning made headlines when he said that those goals were less hard sales targets and more to shock and motivate the company. 

Earlier this month, when VW leaders released the November sales figures, they said that it was the second-best November since 1973. 

The Passat sold 8,876 units last month, and the Passat TDI had the best year-to-date results on record, according to a VW news release. 

Overall, sales were down year-to-date by 5.2 percent, according to Volkswagen sales figures.

But VW said that when those numbers are adjusted for models in "run-out," the year-to-date pace is on par with the prior year-to-date pace. Models in run-out are those that are soon to be replaced with new versions. 

Senior automotive analyst Bill Visnic with said that Volkswagen has some fabulous products, but some are not resonating with customers in the United States. 

When VW launched the redesigned Passat, it was at a lower price point and designed with more room, which American buyers like. But analysts said that even the new, lower price of the Passat is still higher than some of the competitors' prices. 

And he said that Volkswagen isn't getting in on the booming segments, such as midsize cars, compact cars and compact SUV/crossovers. 

There have been reports that an SUV/crossover could be made in Chattanooga. And although a decision on that hasn't been made public, the local plant does have room to expand for another product.

And in September, Marc Trahan, executive vice president of quality for Volkswagen in the U.S., said that officials will make the decision by the end of the year about where to build the seven-passenger SUV, according to The Associated Press and Bloomberg Businessweek

He also said that if the SUV isn't built in Chattanooga, something else will be, according to archives. 

Gutierrez added that the Tiguan hasn't kept pace with the booming crossover segment and that lower gas prices have also put a damper on TDI sales, which have helped Volkswagen. 

"[Volkswagen leaders] have found themselves in one of the most competitive markets with some of the most competitive segments we've seen in years," Gutierrez said. 

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