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



Why Oscar Brock Cares About Our Children

I have known Oscar Brock since I was one of the first females to join the Jaycees. Chattanooga is very lucky to have him as a concerned citizen. When I first joined the Jaycees, I wanted to do more for the community.  Oscar has taken that desire and surpassed anything I could ever imagine. He continues to strive for the underdog and do what is right. He is always willing to ... (click for more)

Backing Vince Dean For Criminal Court Clerk

I have known Vince Dean for over 30 years and served with him throughout his exemplary career with the Chattanooga Police Department. In all of my commands, he was an invaluable asset, not only to me as a trusted and extremely competent subordinate but to the department and the City as a true professional. His public service also extended to the City of East Ridge and the State ... (click for more)

County Commission Chairmanship Up For Grabs After Exit Of Henry, Skillern

The chairmanship of the County Commission is up for grabs after the exit of two commissioners who have held the post in recent years. Larry Henry is moving on to serve as Circuit Court clerk. Fred Skillern was upset by Randy Fairbanks in the Republican primary. Most of the returning commissioners have their eye on the possibility of taking over as chairman, or at least getting ... (click for more)

PAST Act On Horse Abuse Stalls Out In U.S. House Despite 70% Support

Rep. Ed Whitfield (KY-01), chairman of the House Subcommittee on Energy and Power, issued the following statement today regarding the Prevent All Soring Tactics (PAST) Act, H.R. 1518:   “I regret to inform you that Speaker of the House, John Boehner, currently refuses  to bring the Prevent All Soring Tactics (PAST) Act to the floor for a vote.  His decision ... (click for more)

Jones, Vols Meet The Press A Day Before Fall Football Begins

KNOXVILLE, Tenn. -- What did  Butch Jones  have to say about Tennessee’s 2014 football team on the eve of the Vols' first practice? Find out in this transcript of Thursday’s press conference:  HEAD COACH BUTCH JONES (Opening Statement) "It's great to see everyone, and I hope everyone had a great summer. We will hold an open practice on Saturday ... (click for more)

Jane Webb Is A Fun-Loving Runner At Heart

Jane Webb isn’t one of those people who started running when she was a kid, but she loves the benefits since she restarted her running career about four years ago. She’s all about being active and doing things that are good for you,   but long-distance running never really captured her attention and she’s found that she can receive the same payoff by covering ... (click for more)