Roy Exum: VW, The Future Is Now

Friday, June 20, 2014 - by Roy Exum
Roy Exum
Roy Exum

Reuters, the international news agency, reported a full six months ago that Volkswagen AG would build a new SUV vehicle at its Chattanooga assembly plant. Since then, the world’s automotive experts have become mystified by the German auto giant’s bumbling inability to choose between Chattanooga and Mexico for a promised $7 billion commitment in North America.

"VW is taking way too long again to tackle another pressing U.S. problem," Arndt Ellinghorst, London-based analyst at ISI Group told Reuters reporters two weeks ago. "The crossover will be a gainful addition to their portfolio, VW has got no time to waste."

But Volkswagen officials remained mum late Thursday afternoon after Reuters issued an updated report earlier in the day that Chattanooga would soon be chosen to build two desperately-needed SUV-style vehicles. Even if VW were to announce today that the crossovers will be built at the Chattanooga facility, it is believed it will be 2016 or early 2017 before the first models actually roll off the assembly line.

Consider this: Car sales in the United States for the month of May were the best since The Great Depression. The website Autodata claimed 15.5 million Americans bought new cars last month. Chrysler sales were up 17 percent while General Motors was up 13 percent, this despite embarrassing recalls.

But VW got hammered. Sales were down 15.4 percent with 32,163 units sold, which analysts noted was worse than the January-to-May drop of 11.5 percent. The losses included the entire VW line – the Golf brand dropped 41.3% to 1,793. Sales of the Jetta dropped 12.5% to 13,915. Beetle sales dropped 26.6% to 2,729. And the Chattanooga-built Passat sales fell 12.8% to 8,955.

By comparison, Toyota – with a total sales increase of 17 percent last month – sold a whopping 49,584 of its popular Camry model alone. It is going to take a long time for VW to build a Passat or any other vehicle to displace the popular Camry, now the No. 2 selling vehicle in the country behind the F-150 Ford truck.

Volkswagen realizes the SUV market is ripe for a midsize and a compact model. Currently sport utility vehicles make up 17.6 percent of the global market but the experts believe that figure could rise to 24 percent by the year 2020. “The SUV market is still growing, and it’s a key segment for all manufacturers,” Roman Mathyssek, a German analyst, told the Detroit News from Munich.

“The VW brand still has growth potential in SUVs, which could especially help them to build a stronger position in the U.S. and emerging markets,” added Mathyssek, albeit as politely as he could.

Michael Horn, a 25-year VW veteran who took over the embattled U.S. operations not long ago, has a better vision. “We’ll succeed only if we build the cars people want here,” he told NBC News. “For now we have to have realistic targets. The vision is right … long-term … but the timing is a huge challenge.”

The much-anticipated CrossBlue model will be joined by a “stretched” version of the VW Tiguan because insiders believe, without a full portfolio, VW will be unable to maintain the growth pace in an admittedly-intense competition for the American buyer.

Mark McNabb, the CEO for Volkswagen USA, is optimistic. “We are pleased with our core vehicles and TDI clean diesels continue to show strength in the market. With a full range of fuel-efficient vehicles, seven of which deliver more than 40 mpg on the highway, we anticipate a steady demand.”

A vexing problem is VW must improve quality problems. A recent J.D. Power Dependability Study revealed VW is well above the industry average of 133 problems per 100 vehicles. While industry leader Lexus has a 68, Volkswagen is 158.

But the biggest problem of all is that Volkswagen must make a move. The company may be the largest manufacturer in Europe but the longer it waits to open a SUV line the longer it will take to compete and, in honesty, even the news agency Reuters knows VW is six months behind already.

royexum@aol.com




Roy Exum: ‘Mom Don’t Have…I Do’

It’s hard to know what goes through the mind of a five-year-old, particularly one who watches her mom go in and out of jail due to drug addiction. But little Sunshine Oelfke is obviously being raised right by her grandmother because the other morning, the five-year-old came into the kitchen before leaving for kindergarten with a baggie full of coins from her piggy bank. “I asked ... (click for more)

Problems With The Key Staff Findings On The Landfill

Concerning the proposed C&D Landfill in Harrison, on Sept. 11, the staff of the Chattanooga Hamilton-County Regional Planning Agency made a presentation to the Planning Commission for the rezoning request.  Mr. Schultz for the staff made the following statements which were titled "Staff Key Findings."  I would like to contend with their findings.  1. "Proposal ... (click for more)

Signal Mountain Committee Says Pulling Away From County Schools Is "Feasible"

After eight months of investigating the viability of Signal Mountain establishing a separate school district, a committee of six has determined that it is feasible and would meet the goal of improving the education provided to students. The committee was also tasked with identifying obstacles and if possible to find ways to overcome them.  Results of the report were presented ... (click for more)

County Commission Votes 7-2 For Rezoning For C&D Landfill At Harrison

The County Commission on Wednesday voted 7-2 to approve rezoning for a Construction and Debris landfill at Harrison.  Voting in favor were Greg Beck, Warren Mackey, Sabrena Smedley, Greg Martin, Tim Boyd, Randy Fairbanks and Jim Fields.   Opposed were Chester Bankston and Joe Graham.  Commissioner Boyd said it was just the first step in permitting for ... (click for more)

Signal Mountain Hits One Last Bump In The Road At State Volleyball

MURFREESBORO, Tenn. – It’s not like Signal Mountain hasn’t been down this bumpy road before. Despite the obstacles created by losing early in the TSSAA state volleyball tournament, the Lady Eagles have proven to be cautious, but relentless drivers on a path back to title contention twice before. They’re on the same course this October. After losing to Knox Catholic ... (click for more)

Baylor Advances To State Final; Sale Creek Ousted

MURFREESBORO, Tenn. – The Baylor Lady Red Raiders are one win away from another D-II Class AA state volleyball championship. Facing the Brentwood Academy Lady Eagles for the third time this season here at Blackman High School Wednesday morning in the winner’s bracket final, Baylor was able to advance by winning in four sets, but it was a battle for the ages where two really good ... (click for more)