Gojirra99
10-18-07, 09:33 AM
Volkswagen Takes Aim at Toyota in U.S.
German Auto Maker
To Cut Features to Allow
More-Competitive Prices
By STEPHEN POWER
October 18, 2007; Page A10
WOLFSBURG, Germany -- Volkswagen AG's chief executive plans to narrow the global sales gap that separates it from Japan's Toyota Motor Corp. by ramping up competition in the U.S., partly by pricing its vehicles more aggressively there and by curbing costly frills many Americans don't want.
The comments by Martin Winterkorn are the latest sign of the company's new emphasis on growth after years of job cuts. They also hint at the tensions he faces 10 months into his job as CEO of Europe's largest auto maker by vehicles sold.
The moves could put added pressure on the U.S. auto market, which has seen weak sales and has been roiled by Detroit's restructuring efforts. (See related article.)
Mr. Winterkorn is making the transition from running VW's premium Audi business to running a volume car maker whose fortunes depend on striking the right balance between adding new features and controlling costs. That includes re-evaluating the features on VW-brand vehicles in the U.S., where Volkswagen has said it wants to sell about one million cars by 2018 compared with about 330,000 last year.
"We have definitely added too many technical items that [American] customers don't want to pay for," Mr. Winterkorn said in an interview. He cited Volkswagen's tendency to equip U.S. models with external mirrors that fold inward to account for narrow streets and tiny parking spaces. "Who needs that in the U.S.? The streets there are so wide," he said.
By tailoring its cars more to U.S. tastes, he said, it could offer future versions of its Jetta and Passat below what they sell for now. The Jetta starts at about $17,000 in the U.S., while the Passat starts for roughly $23,900. Toyota's Corolla is priced about $15,200, while the larger Camry starts at about $20,000.
Between now and 2010 -- when many industry analysts expect auto global demand to rise 12% to 15% -- Volkswagen is betting it can increase its sales by roughly 30%, from about six million this year to eight million in 2010. Although Volkswagen's targets have drawn skepticism, Mr. Winterkorn says the growth is possible partly because of a new, more centralized management structure that he says allows quicker decisions.
Between now and 2010, Volkswagen plans to add 12 models to its global lineup. The company is keen on launching more vehicles in new segments, such as a new compact sport-utility vehicle called the Tiguan. Mr. Winterkorn said much of the sales growth at Toyota, which sold 8.5 million vehicles last year, has come from its expansion into nontraditional segments, such as SUVs, pickup trucks and multipurpose vehicles, which are similar to minivans.
"We of course hope to take [customers] from the Japanese and surely the Americans" in the U.S. market, Mr. Winterkorn said. After losing more than €2.5 billion ($3.5 billion) in North America over the past five years, Volkswagen is considering building its first plant in the U.S. in nearly 20 years. Importing cars from Europe is costly, given the strong value of the euro against the dollar. "We want to illustrate that we take the U.S. seriously," Mr. Winterkorn said.
He also complained that the weakness of the Japanese yen gives Toyota cushion to equip its exports to Europe with features.
http://online.wsj.com/public/resources/images/NA-AO282A_VW_20071017190850.gif
Although his team has vowed to revive the VW Phaeton, a $68,000 luxury sedan pulled from the U.S. market after poor sales, he said that he is accelerating efforts to defend Volkswagen at the low end of the market. He cited its new up! concept car, a prototype of what it hopes will be a new family of small, fuel-efficient models that can be built on a common platform and sold in emerging Asian markets and Western Europe.
http://online.wsj.com/public/article/SB119267316688763036.html
German Auto Maker
To Cut Features to Allow
More-Competitive Prices
By STEPHEN POWER
October 18, 2007; Page A10
WOLFSBURG, Germany -- Volkswagen AG's chief executive plans to narrow the global sales gap that separates it from Japan's Toyota Motor Corp. by ramping up competition in the U.S., partly by pricing its vehicles more aggressively there and by curbing costly frills many Americans don't want.
The comments by Martin Winterkorn are the latest sign of the company's new emphasis on growth after years of job cuts. They also hint at the tensions he faces 10 months into his job as CEO of Europe's largest auto maker by vehicles sold.
The moves could put added pressure on the U.S. auto market, which has seen weak sales and has been roiled by Detroit's restructuring efforts. (See related article.)
Mr. Winterkorn is making the transition from running VW's premium Audi business to running a volume car maker whose fortunes depend on striking the right balance between adding new features and controlling costs. That includes re-evaluating the features on VW-brand vehicles in the U.S., where Volkswagen has said it wants to sell about one million cars by 2018 compared with about 330,000 last year.
"We have definitely added too many technical items that [American] customers don't want to pay for," Mr. Winterkorn said in an interview. He cited Volkswagen's tendency to equip U.S. models with external mirrors that fold inward to account for narrow streets and tiny parking spaces. "Who needs that in the U.S.? The streets there are so wide," he said.
By tailoring its cars more to U.S. tastes, he said, it could offer future versions of its Jetta and Passat below what they sell for now. The Jetta starts at about $17,000 in the U.S., while the Passat starts for roughly $23,900. Toyota's Corolla is priced about $15,200, while the larger Camry starts at about $20,000.
Between now and 2010 -- when many industry analysts expect auto global demand to rise 12% to 15% -- Volkswagen is betting it can increase its sales by roughly 30%, from about six million this year to eight million in 2010. Although Volkswagen's targets have drawn skepticism, Mr. Winterkorn says the growth is possible partly because of a new, more centralized management structure that he says allows quicker decisions.
Between now and 2010, Volkswagen plans to add 12 models to its global lineup. The company is keen on launching more vehicles in new segments, such as a new compact sport-utility vehicle called the Tiguan. Mr. Winterkorn said much of the sales growth at Toyota, which sold 8.5 million vehicles last year, has come from its expansion into nontraditional segments, such as SUVs, pickup trucks and multipurpose vehicles, which are similar to minivans.
"We of course hope to take [customers] from the Japanese and surely the Americans" in the U.S. market, Mr. Winterkorn said. After losing more than €2.5 billion ($3.5 billion) in North America over the past five years, Volkswagen is considering building its first plant in the U.S. in nearly 20 years. Importing cars from Europe is costly, given the strong value of the euro against the dollar. "We want to illustrate that we take the U.S. seriously," Mr. Winterkorn said.
He also complained that the weakness of the Japanese yen gives Toyota cushion to equip its exports to Europe with features.
http://online.wsj.com/public/resources/images/NA-AO282A_VW_20071017190850.gif
Although his team has vowed to revive the VW Phaeton, a $68,000 luxury sedan pulled from the U.S. market after poor sales, he said that he is accelerating efforts to defend Volkswagen at the low end of the market. He cited its new up! concept car, a prototype of what it hopes will be a new family of small, fuel-efficient models that can be built on a common platform and sold in emerging Asian markets and Western Europe.
http://online.wsj.com/public/article/SB119267316688763036.html