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Volkswagen Does It, Again – It Just Took 39 Years

Maker continues gaining momentum after decades of trouble.

by on Dec.04, 2012

No longer running on empty. VW is betting products like the new Beetle Convertible will help it continue gaining momentum.

Considering the strong performance by most automakers in November it might be easy to downplay the numbers from Volkswagen AG.  After all, the maker reported a gain of “only” 29% for the month, less than half the increase of little Subaru.

It was, nonetheless, the best VW has done in nearly four decades – since November 1973, to be more precise – when the original Beetle was still the most successful import product in the U.S. market and names like Toyota, Nissan and Honda were barely on the radar for American car buyers.

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Things would change rapidly in the mid to late-1970s. Buoyed by the sudden surge in demand for high-mileage products in the wake of twin Mideast oil shocks, Japanese makers rapidly gained traction. VW tried to fight back with the little Rabbit but its early success was short-circuited by higher prices and lower quality, twin problems that nearly sank the German maker.

“It wasn’t just the frequency of repairs, but the high cost of repairs,” said analyst David Sullivan, of AutoPacific, Inc.

In fact, by 1992, with sales at barely 50,000 – little more than a tenth of their one-time peak – Volkswagen officials gave serious thought to pulling out of the States. They ultimately decided to stay, but the U.S. market remained little more than an after-thought as VW shifted focus to China and other emerging markets.

That began to shift as company officials laid out an aggressive plan for world domination. It became clear that VW couldn’t brush back rivals like General Motors or Toyota without re-establishing a serious presence in the American market.  And that meant developing products specifically tuned for U.S. buyers.

The latest-generation Jetta began that shift, followed by the 2012 Passat – for which the German maker also opened its first U.S. assembly plant since closing a long-troubled factory in Westmoreland, Pennsylvania nearly three decades earlier.

The two new offerings have scored big, sales of the Passat, in particular, increasing 75% for November and a whopping 543% for the first 11 months of 2012. Jetta gained nearly 11% in November, though it is slightly down for the year-to-date.

But VW has also gotten a big boost from its littlest model, the third-generation Beetle jumping 20% last month and 426% for the first 11 months of the year.

That helped push a 29% jump in November — the 28th consecutive monthly gain — and a 35% increase since the beginning of January for the Volkswagen brand.

The maker begins December with plenty of momentum – and a key new product, the Beetle Convertible it is showing for the first time at the 2012 LA Auto Show.

And more is coming. “I think they know they can’t hit their target with the line-up they have today,” said analyst Sullivan.

Among the products in the pipeline, VW has at least one new crossover-utility vehicle coming to the States, possibly two.

“We’re not complacent,” proclaimed Jonathan Browning, CEO of Volkswagen Group of America, during the maker’s LA Auto Show news conference. “We are not yet satisfied with the results.”

Along with the new product, VW is amping up its marketing efforts.  It has scored big during the last two Super Bowl ad extravaganzas and hopes to repeat in February 2013.

The goal is to finally beat the all-time annual sales record – 569,696 set in 1970 – during the latter half of the decade.  That would help position parent Volkswagen AG as the world’s biggest automaker.

There are still plenty of obstacles ahead, but considering Volkswagen of America’s recent momentum the maker is more optimistic than it has been in decades.

Joe Szczesny contributed to this report.

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