12/1/2008 | 5 MINUTE READ

VW's Minivan Strategy

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By letting Chrysler build the Routan-based on the Chrysler minivan-the German company was able to accelerate its offering in the market.


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The last time Volkswagen had a van in the U.S. market was back in 2004. The EuroVan. As Bret Scott, VW Routan product manager, recalls, there weren't a whole lot of those vans sold back then. Fast forward a couple of years, to January 2006, when VW and DaimlerChrysler Corp. agreed that the Chrysler part of the organization would provide VW with a minivan to be built at the Chrysler Windsor Assembly Plant. At the time of the announcement, Wolfgang Bernhard, who was then the chairman of the VW Brand Board of Management-and had previously been the Chrysler Group chief operating officer-said, "This is an important and groundbreaking decision for the Volkswagen brand in the USA. In the VW product range, we are missing a van for families which meets the necessary requirements of our American customers. With this new vehicle, we are going to enter another important market segment with our own product." (Mark those final words well.) And Tom LaSorda, who was then the Chrysler Group president and CEO, and who is now the vice chairman and president of Chrysler LLC, stated, "This is a win-win deal for both the Chrysler Group and Volkswagen. With our manufacturing and platform engineering flexibility, we can deliver a high-quality product specifically tailored to Volkswagen's customers' tastes with little or no substitution effect on the current Chrysler and Dodge minivan lineup." Last year, Chrysler brought out the 2008 Dodge Caravan and Chrysler Town & Country, its fifth generation of minivans. And even though it is no longer DaimlerChrysler, it is still producing a minivan for Volkswagen of America,the Routan.

No small credit ought to go to Windsor Assembly, which has been practicing flexible production capability since the summer of 2000, when it began the production of what were then the all-new 2001 Chrysler Town & Country and Dodge Grand Caravan minivans. And since that time, there has been additional investment, such as $542-million that went for the ability to produce two platforms and piloting a third platform all at the same time, and $246-million for a paint facility that is sized so that it can handle the dimension of 11 body styles-or more. So while the production of the Chrysler and Dodge products continues apace, now there is the addition of the Routan. (The Chrysler Pacifica crossover had been made at the plant; it went out of production in '08.)

Fundamentally, the Routan can be considered a third variant of the Chrysler Group minivan platform. (As some of you may recall, there used to be a third variant, the Plymouth Voyager, which went out of production in 2000, as the third-generation faded away.)

But Scott says that VW didn't simply go to Chrysler and say, in effect, "Give us a minivan." Rather, they put engineers-yes, German engineers-to work with Chrysler during the development of the RT program, the gen-five Chrysler minivan and the Routan. And some of the changes are rather subtle. For example, steering wheels in VWs tend to be thicker than the typical U.S. version; so there is a thicker steering wheel for all of the products, with the Routan's being leather-wrapped to boot. But in terms of the powertrain (there are two V6s available in the Routan, a 3.8-liter that produces 197 hp and a 4.0-liter that produces 251, both of which are mated with a six-speed automatic transmission), they're the same as in the Chrysler Group products, although Chrysler offers one that comes in below the 3.8-liter, this a 3.3-liter that produces 175 hp.

The front and rear fascias are distinctively Volkswagen, and Scott says there are "Volkswagen-specific springs, dampers, bushings and steering gear" that "provide European driving dynamics and 'feel' for the road." But he admits that when it comes to the chassis modifications it was mainly an issue of tuning, not hardware. Inside, the fundamentals are the same as those in the Chrysler product, but the materials are changed. There is a more Euro-style material deployment: thicker, richer, softer than is the North American builder norm. But the IP is still the IP, for example. Still, he says, "At the end of the day, we believe that European design and spirited driving dynamics, combined with class-leading available feature content, will appeal to shoppers in the minivan category." And let's face it, when it comes to minivans, Chrysler is certainly nearly synonymous with the category. But what of the category? Tim Ellis, Volkswagen of America's vp of Marketing, acknowledges that the segment is declining, but goes on to point out that it is a segment that (well, at least before the current cratering of the entire U.S. car market), has sales of about 700,000 units per year. "When Routan is fully ramped up," he says, we confidently aim for 5% or more of this total universe." What's more, because VW doesn't have an indigenous offering in North America (it has, say, the Multivan in Germany, but it would be an exceedingly expensive vehicle for this market, not merely because of the weakness of the dollar, but because of the fundamental engineering of that product, which is more of a van than minivan), all of this business is, for VW, plus business (and there is a corporate goal of selling 800,000 vehicles in the U.S. by 2018, so any boost helps).

Essentially, it comes down to time. And, of course, money. The deployment of the considerable resources of Chrysler have allowed VW to have a product much more quickly than it could have had it tried to do the job alone. Which is smart.

Project America Volkswagen has decided that in an effort to achieve U.S. sales of 800,000 units per year by 2018 that manufacturing in America is the right thing to do. (The overall weakness of the dollar probably has something to do with it, too.) So in July, 2008, it announced that it would be building an assembly plant 12 miles northeast of downtown Chattanooga, Tennessee. The plant is to build a future product that is targeted at the midsize market currently dominated by the Toyota Camry and the Honda Accord. 


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