Roy Exum: VW Is In ‘Paradise?’

Monday, April 28, 2014 - by Roy Exum
Roy Exum
Roy Exum

Dan Neil, the automotive editor of the Wall Street Journal, had a dandy time dissing the 2014 Volkswagen Passat in this weekend editions of the prestigious national newspaper and one of his zingers pronounced, “It is even built in the glorious right-to-work paradise of Chattanooga, Tenn.”

For whatever its worth, Dan wrote that he found the car “endlessly fascinating” but quickly launched into a gloomy diatribe about Volkswagen, pointing to the fact the very automobile built at Volkswagen’s assembly plant here “is laying siege to the (mid-size) segment basement, with sales down 6.3% through March, even with the new, more fuel-efficient (24/34 mpg, city/highway) four-cylinder engine available.

“Zoom out, and the picture is even bleaker,” he wrote. “In a torrid U.S. market—a March seasonally adjusted rate of 16.3 million, near an all-time high—VWA sold 36,717 vehicles in March, having its head handed to it by, for example, Subaru (44,479). Eleven of VWA's 13 models saw sales decline in the first three months of the year.”

While it is neither my place nor my calling to critique a true professional’s work, I was able to drive a new Passat not long ago and felt a bit of pride. Face it, the car is manufactured by Southern employees who just voted against affiliating with the much-dreaded United Auto Workers union, which I suspect must have ruffled the author’s feathers. At the same time, his insight regarding Volkswagen is quite enlightening.

The talented WSJ writer, who fails to grasp the right-to-work ability is indeed a freedom that most paradises would probably include, uses VW’s disappointing first quarter to proclaim the German company’s “U.S. footprint is wildly, hilariously oversize, and excess capacity is one thing German auto executives positively hate.”

According to his article, “Now would be a good time to panic, but VW executives stationed in Herndon, Va., and Wolfsburg (Germany) have committed to no more than what is known in the trades as a mid-model refresh, which sounds like something you would find on a fashion shoot."

“At the Geneva auto show in March,” the article read, “VWA chief Michael Horn —a German executive who in December succeeded Jon Browning, a Brit—assured reporters that the Passat was getting a face-lift for the 2016 model year, with new features, content and "fresh" styling. Well, may I say, chief, that is a leisurely timeline. Your house will have been burning a good four years by the time the fire brigade arrives.”

He explains the four-year “house fire” line this way: “… if you go to a car dealership and look at any car, you are looking at a moment in time, design-wise. Cars have life cycles and generations, and VW Group—as part of its decade long quest for global domination—has embraced longer product life cycles to save money.”

Suddenly I am fascinated by the auto industry expert’s theory. “In other words,” he continued, “the company changes its product less frequently than its competitors (a slower product "tempo" is the term of art). Not much, probably only 90-120 days in the case of Passat. But cumulatively, VW brand turns over its fleet more slowly than competitors, saving millions of euros in the process, at least on the front end.

“And that might be OK, if VW's U.S. products had sufficient shelf life,” Neil added.

“Yeah,,” he promptly countered himself, explaining a quandary that faces Volkswagen but giving a view of the global car market that backward hayseeds in Chattanooga such as myself have never thought to grasp.

Nell wrote, “And it might be OK if the exterior design had legs. But VW's design philosophy of late has favored a dignified, if perishable restraint (e.g., Passat). Meanwhile, the competition has produced some real lookers, including Fusion and Mazda6.

“In the U.S. midsize, midprice-sedan segment—absolutely frantic with innovation and competition—the Passat is suffering accelerated decrepitude, like the crew on that one Star Trek episode. And its five-year mission still has one year to go.”

Now you know about the four-year house fire but here is an expert who knows “decrepitude” is a word for “feebleness, particularly from old age.” And Neil isn’t shy about painting an abysmal picture when the 2014 hits the competitive market.

“The maddening thing about the Passat,” he wrote, “is that most of its disadvantages are comparative. On its own, it is a comfortable, spacious sedan with very able, European handling. But when you start running the value-proposition numbers, comparing it with more rapidly evolving competitors, it quickly gets hopeless.

“I mean, look at the equipment list for, say, the Honda Accord EX-L with Navigation. The latter comes with a brace of driver-support systems the VW doesn't have: forward collision alert, lane-departure warning, multiangle-rearview camera, LED tail lamps and a lot more,” he pointed out.

So what does this all mean, other than VW should just quit altogether before the 2016 is introduced? “Until then VW's quintessential Yankee Wagen will be residing in Valley Forge,” Dan ended his article with a flourish, but in my way of thinking, that isn’t exactly a paradise either.

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