VW: Won’t Back Down

In this industry, no matter how good things are going, there is always work to be done. Those who don’t recognize that fact do so at their peril.

Let’s start with some numbers.  Like 4.97-million.  That’s the number of vehicle deliveries that Volkswagen Group—as in Volkswagen, Audi, Porsche, Škoda, SEAT, Volkswagen Commercial Vehicles—made globally during the first half of 2014.  That is not a trivial number by any means.  That is an increase of 5.9% compared with the same period in 2013.   When making the announcement of the numbers, Christian Klinger, VW Group Board Member for Sales, said, “The Volkswagen Group showed satisfactory development in the first half of the year even though market conditions were at times difficult. However, the economic environment on some world markets remains tense.”  Which doesn’t sound exactly exuberant, but one must maintain a certain sense of stability, even when sales are on the rise.  Klinger went on to say that “Volkswagen Group is entering the second half of the year with confidence.  But we are also well aware of the tasks ahead.”

In other words, there is work to be done.  In this industry, no matter how good things are going, there is always work to be done.  Those who don’t recognize that fact do so at their peril.

Another number: One billion.  As in dollars.  This is the ballpark figure for the amount of money that Volkswagen has invested in the Chattanooga, Tennessee, area, where it built an assembly plant.  This is not just any building.  It was the first car factory in the world to get LEED Platinum certification for its environmental practices.  It is the only car factory in the world with LEED Platinum certification.  No, not even Wolfsburg is as green.

The Chattanooga plant is where VW builds the Passat Sedan that was specifically designed for the North American market.    Meaning, in effect, that unlike in other parts of the world, where cars of a mainstream nature tend to be on the smaller side, the Chattanooga Passat is bigger.

A not-so-good number is 49,775.  That’s the number of deliveries of the Passat that Volkswagen of America has made during the first half of 2014.  That’s down 11.3% compared with the same period last year.

Another good number: 900-million.  Again, as in dollars.  That’s the amount of money that Volkswagen Group is investing for the production of an all-new, midsize SUV that will be built in Chattanooga.

Note that VW isn’t shying away.  It is leading large with a massive investment.

Or, as Prof. Dr. Martin Winterkorn, chairman of the Board of Management of Volkswagen Aktiengesellschaft, said when making the announcement: “The United States of America is and will remain one of the most important markets for Volkswagen. Over the past few years, we have achieved a lot there. We are now launching the second phase of the Volkswagen campaign in the US. With the midsize SUV, the expansion of the Chattanooga plant and the new development center, the focus is on the wishes of the U.S. customer. This is also a strong signal for the U.S. as an industrial and automobile production location. The Volkswagen brand is going on the attack again in America.”

While the word attack may be a bit on the strident side, it is reflective of the fact that this is a tough business.  Even though VW’s U.S. sales are anemic, they are not simply shrugging their collective shoulders and concentrating solely on where they are not only number-one but growing like mad (i.e., China), they are developing a new product and building new production capability to produce a vehicle that will undoubtedly have great appeal in the U.S.  This is a seven-seat SUV.  Yes, we like bigger vehicles here in America.