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VW May Kill Off the Beetle

Cost cutting program threatens maker’s slow-selling product lines.

by on Mar.10, 2015

Despite adding variants like the Convertible, sales of the latest Beetle have been sluggish.

It may serve as the icon of the Volkswagen brand, but barely three years after launching an all-new version of the Beetle, the little car may be an endangered species, one of several VW products in the crosshairs as the German maker races to slash spending by about €5 billion, or $5.4 billion, by 2017.

Another model likely to vanish is the three-door version of the Polo subcompact, according to various reports out of Germany. Other slow-sellers, such as the Scirocco might also be targeted.

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VW isn’t reining things in entirely. The maker is investing heavily in its utility vehicle line-up, with a midsize model set to be built at its plant in Chattanooga, Tennessee, and a new version of the Tiguan to go into its Puebla, Mexico factory. Expanding those facilities will cost the German maker nearly $2 billion.

(For more on the new Tiguan, Click Here.)

VW is being pulled in two different directions. On the one hand, it has set an aggressive goal of overtaking Japanese giant Toyota Motor Co. to become the world’s largest automaker by the end of the decade. It last year nudged past General Motors to become the industry’s number two manufacturer. At the same time, VW’s earnings and margins have been weaker than expected, and that has forced CEO Martin Winterkorn to announce a major cost-cutting program.

The original Beetle and the latest, third-generation Bug - which could be VW's last.

“The company must have the courage to bow out from some projects and variants,” Winterkorn suggested last July when first announcing the belt-tightening plan which he said will be “clear, effective and sometimes painful.”

At the time the announcement was made, Volkswagen had 301 different models on the market around the world, offered through more than a dozen different brands. And along with the new SUVs it is working on a number of others, ranging from the upcoming Bentley Bentayga SUV to a likely production version of the Sport Coupe Concept unveiled at the Geneva Motor Show last week.

(VW Aims to be auto industry’s “Innovation Leader.” Click Here for more.)

While few expect to see a wholesale reduction in VW’s model count, the maker is expected to try to hold down on the rate of product proliferation. It has already trimmed a few products, such as the Eos convertible. And more are certain follow, with the 3-door Polo considered high on the list.

As for the Beetle, it was once the maker’s best-selling product – indeed, in earlier years its only product – but it began to lose momentum in the 1970s to more modern Japanese small cars. VW tried to revive its fortunes with a second-generation New Beetle, but momentum didn’t last long. A third-generation Bug was introduced in late 2011, VW designers trying to give the new model a more masculine look to overcome the New Beetle’s image of being a “chick car.”

At the Geneva show last week, Volkswagen CEO Martin Winterkorn said “We are on track with our efficiency program,” but a spokesman later told the Reuters news service “there are no decision yet” on the fate of either the Beetle or Polo.

(VW Passat named European Car of the Year. Click Here for the story.)

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5 Responses to “VW May Kill Off the Beetle”

  1. Frank Rafuse says:

    just bring back the older Bettle with all of the new updates. they will SELL for Sure. I heck of lot of people are restoring the older Bettles. that should Tell you Something that Works. FRANK . Please Reply Back. Thank You.

    • Paul A. Eisenstein says:

      Even if the original beetle could work, the changes needed just to get it legal — emissions, safety, mileage — would be daunting, expensive, and likely result in something like the current Beetle, I’m afraid. Remember, you don’t have to meet federal mandates restoring an old car. You do have to if you’re a manufacturer building a new car.

      Paul A. Eisenstein

  2. Jorge says:

    People restore the original VW’s for completely different reasons than the reasons most people buy new cars. There is a very real emotional attachment to the early VW models including the Bus. They represent a much different time and culture when life was simpler and in some respects better. They represent a bygone era that many value and want to still retain in their lives. There is a complete sub-culture for those who enjoy the older VW models. Most of these people would not buy any new VW though a small percentage do support the newer models as their daily driver.

    Now as to the demise of the current model Beetle – that was almost a given with the restyling of the “more masculine” Beetle being terrible, IMNHO. Unless VW can do a complete redesign closer to the original or a cult like trendy new version like BMW has done with the Mini, I’d say the Bug’s life has come to an untimely end due to poor styling, not from a bad product per se.

    In regards to the VW Ag “goal of the week” cost cutting program, that is primarily to appease stockholders who are unhappy that VW stock has underperformed for years and is likely to continue to do so. In reality however it’s tough to make a business case for continuing the VW Bug and Scirocco which are not very attractive in there current form as low sales illustrate.

  3. heyfred3000 says:

    I might be mistaken, but its possible the decision makers are living far from the places where the New Beetle is popular. The Polo is by far the most popular model around our home in Italy, but the Beetle is more popular than the Jetta so far in the southern US. It might turn out that it would be like GM’s cutting Pontiac, which was hugely popular in the south, and not all those folks went to Chevy.

  4. zelda7411 says:

    I agree, I hate the new styled Beetle it’s downright ugly. The squashed look has squashed it’s appeal. I also agree if the make the beetle to look like the 60′s version with the modern upgrades it would sell. I currently have a 2000 beetle It drives great the cup holders are useless though in the driver area anything bigger than a soda can won’t fit. The dash board sits dead on top of them. But that’s my only grievance with my 2000 VW beetle. I put $25 in my tank and go a whole week to and from work. It’s a great car.