Volkswagen Expects To Gain US Market Share In 2011; Eyes Large SUV
January 09 2011 - 11:13AM
Dow Jones News
Volkswagen AG (VOW.XE) expects to gain market share in the U.S.
this year and could add a large sports-utility-vehicle above the
Touareg model to its lineup as part of its ambitious expansion plan
in North America.
"Around 60% of the trade-ins for our new Jetta come from other
brands ... including Nissan and Ford," Volkswagen's U.S. chief
Jonathan Browning told reporters on Sunday during a press briefing
at its U.S. headquarters ahead of the North American International
Auto Show. He described Toyota Motor Corp. (7203.TO), Honda Motor
Co. (7201.TO) and Hyundai Motor Corp. (005380.SE) as main
competitors for VW in the U.S.
The German automaker last year launched a new version of the
Jetta, its best-selling vehicle in the U.S., and expects the new
car to foster sales growth in coming months as part of its effort
to turn around its loss-making North American operations.
Browning said during an evening event late Saturday in
Washington that the new-midsize sedan, which will be presented for
the first time Sunday evening at the auto show in Detroit, could
account for roughly the same annual sales volume as the Jetta in
coming years. He said he also sees further sales growth potential
in the U.S., particularly for the Golf hatchback and the small
Tiguan SUV. He added that a larger SUV with three row of seats
above the Touareg could be a promising addition to the brand's U.S.
lineup to attract a broader range of customers.
The VW brand posted a 20% sales rise year-on-year in the U.S.
2010 to 256,830 cars, compared with a 23% increase at the company's
Audi premium brand to 101,629 cars. Volkswagen's total market share
in the U.S. edged up to 3.1% last year from 2.9% in 2009.
Browning said sales are expected to come in around 300,000
vehicles at the VW brand and around 100,000 at the Audi brand in
the U.S. this year. Asked whether this indicates flat sales at Audi
in the U.S. this year, he noted that the company does expect to
grow in 2011, but declined to elaborate on specific sales targets
for 2011.
He reiterated, however, Volkswagen's long-term target of
boosting U.S. sales volume to 1 million vehicles by 2018, with the
Audi brand accounting for 200,000 cars.
"Volkswagen and Audi will become leading brands in the USA ...
It's not a dream. It's a plan," Volkswagen's sales chief Christian
Klingler told reporters last year.
Growth in the fiercely competitive U.S. market is crucial for
Volkswagen's ambitious global expansion plan, which includes
overtaking Japanese auto behemoth Toyota as the world's largest
auto maker.
Volkswagen emerged relatively unscathed from the dramatic
industry slump in 2009, due mainly to a large presence in China and
a strong foothold in Brazil. Additionally, sales on in German
market were supported by state-backed scrapping incentives during
the economic downturn.
But Volkswagen's turnaround efforts in the U.S. have proved to
be an uphill battle in recent years and market share remained
relatively small, leading the company to boost investments.
Chief Financial Officer Hans Dieter Poetsch said last year the
company's U.S. unit might not be profitable again until 2013.
Browning said late Saturday this target remains unchanged.
Volkswagen is building a new plant in Chattanooga, Tenn., for
the production of a mid-sized sedan, which will hit showrooms later
this year, with annual production capacity of 150,000 cars.
VW is investing up to $1 billion in the plant and creating about
2,000 jobs in Chattanooga. Volkswagen closed its last U.S. plant in
Westmoreland, Pa., in 1988 due to under-utilization amid sluggish
sales.
The company is also building a new engine plant in central
Mexico with an investment of EUR400 million to supply its
car-production plants in North America starting in 2013.
The new facility in its first phase will have an annual
production capacity of 330,000 engines and will supply the assembly
plants in Chattanooga and Puebla, Mexico.
Ramping up local production and purchasing is crucial for
Volkswagen's turnaround plan in North America, because it will
reduce the automaker's exposure to unfavorable currency
fluctuations, which have been a major concern in recent years for
many global automakers.
-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512;
christoph.rauwald@dowjones.com
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