Thursday, June 09, 2005

Volkswagen: Let go of the Luxury

Volkswagen's sales in the US have not been the strongest as of late. Why? Is it a poor series of new products? Have they been slumping across the world? No to both questions. Volkswagen's leadership in America has released to its US dealers versions of its new Jetta filled with options, and not priced competitively. Consequently, VW's American arm, and its American dealerships have gone beserk.

Volkswagen still isn't getting over the corporate-think which saw its brand as something upscale in America. VW is in an enviable market position. They sell inexpensive to make cars at premium prices. However, what they didn't realize was that once a brand has cemented its reputation in a certain market niche, it's very difficult to go beyond that. The ill-advised Phaeton and v8 versions of the Touraeg are evidence of that. Why compete with Audi? Volkswagen didn't listen to its dealers, and gave them cars that they could not and should not have been selling.

And where's the new Golf? The Golf has never sold as well as the Jetta, but to release a vehicle in Europe, publicize it heavily there, and hope that Americans would be blissfully unaware of its existence is silly.

It's good to see that the American corporate arm of VW has executives that are in touch with the marketplace. Hopefully in the future they'll be given greater powers over the release and distribution of product in the geographic areas under their control.

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