VW makes up for lost time
Commentary: Reclaiming U.S. market share
11/01 02:40 PM
SAN FRANCISCO (MarketWatch) -- One of the great scenes in the 1973 movie "Sleeper" is when Woody Allen, transported 200 years into the future, discovers a dusty, old Volkswagen stashed in a cave. He jumps in, turns the key and it starts right up.
Turning to sidekick Diane Keaton, Allen says: "They really built these things, didn't they?" and off they go. Watch the "Sleeper" clip.
"Sleeper" came out decades ago, when VW Bugs ruled the imported-car world. But already then there were signs they were slipping into a long hibernation, pushed aside by fresher, cheaper, more advanced products from Japan.
That's changed. Volkswagen of America reported Thursday it sold 34,311 cars last month, its best October sales since 1972. VW is also on track toward its best year for U.S. car sales since 1973, up nearly 36% for the year to date.
How did the company do it? About a year ago, Volkswagen decided to reclaim its former glory, aiming to sell more cars than anyone else in the world by 2018.
To go from No. 3 to No. 1 Volkswagen (Toyota Motor Corp. (TM:$78.05,00$0.58,000.75%) and General Motors Co. (GM:$25.68,00$0.18,000.71%) hold the top spots) raised U.S. sales targets to levels many auto analysts -- and probably a lot of dealers -- thought were nuts. But the company backed it with offerings that are making huge inroads in market share.
The Jetta has been especially hot. VW sold 11,253 units here last month. Meanwhile, the TDI diesel models now account for 24% of sales, marking another comeback of sorts for diesel fuel.
The Jetta is also hitting a key demographic: young buyers. Just like Ford Motor Co. (F:$11.25,00$0.09,000.81%) and GM in previous generations, VW now knows that clinching the "starter car" deal is essential to building brand loyalty.
Back in the heyday of the ubiquitous Bug, the marque offered nothing to trade up to, unless a VW Microbus was your idea of a trade-up. The next rung on the ladder was a Porsche -- a bit of a reach for most and a little tight on cargo space.
Today, the product line has plenty of models to chose from, which VW proudly points to in its latest monthly car sales data. See VW's Oct. sales stats.
Can VW continue to reconquer lost U.S. market share? That depends on the economy, how well their new models hold up on the road and the cost of service at their dealerships.
So far so good. While their U.S. sales have backed off the pace seen earlier in the year, they still have plenty of momentum.
Executives back at VW headquarters in Wolfsburg must be thrilled they recalibrated their U.S. sales targets when they did, because they are helping offset a grim year in Europe, currently the biggest barrier to VW's global ambitions.
-- Jim Jelter
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