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Jan. 6 (Bloomberg) -- Volkswagen AG, Europe’s biggest automaker, clawed U.S. market share away from Toyota Motor Corp. and Chrysler LLC as new models and the resilient Jetta helped stem a sales decline in the recession-scarred auto industry.

Volkswagen, helped by the Wolfsburg, Germany-based carmaker’s luxury Audi brand, increased its share of U.S. car sales to 2.8 percent in December from 2.1 percent a year earlier. Audi’s 9.3 percent dip and the VW brand’s 14 percent drop came in a month in which the world’s largest auto market crumbled 36 percent to a 16-year low as shaky consumer confidence and tight credit sapped demand.

“Volkswagen got their act together and are really pushing hard in the U.S.,” said Paul Newton, a London-based analyst with research firm IHS Global Insight. “They’re putting money into marketing, into dealers and into a new plant.”

Volkswagen is building a $1 billion factory in Tennessee, its first in the U.S. since 1988, in a bid to end five years of losses in the country and triple sales to 1 million by 2018. VW brand sales slipped 3.2 percent for the year, compared with a marketwide drop of 18 percent. General Motors Corp.’s U.S. total was the smallest since 1959 and Ford Motor Co.’s was the worst in 47 years. VW’s market-share gain came as GM and Chrysler won a government bailout in order to stay in business.

VW rose 30.25 euros, or 12 percent, to 285 euros in German trading, valuing the company at 88.6 billion euros ($119 billion). Porsche SE, the maker of the 911 sports car, owns 50.8 percent of Volkswagen after buying more shares yesterday and is increasing its control.

‘A Good Year’

“The auto industry in 2008 was one of the toughest we’ve seen in a long time,” said Mark Barnes, chief operating officer of Volkswagen of America Inc. “Despite these economic conditions, 2008 was still a good year for Volkswagen.”

Volkswagen’s December sales were boosted by the new Tiguan compact sport-utility vehicle and the Routan minivan, built with Chrysler. Purchases of the Jetta, built at Volkswagen’s factory in Puebla, Mexico, fell 10 percent last month.

“They are benefiting ultimately from the fact that they are viewed as a small-car company and therefore they didn’t get battered as badly during the summer when gas prices were peaking,” said Wes Brown, an automotive analyst at Iceology, a Los Angeles-based market research firm.

Gasoline Prices

Record fuel prices earlier in 2008 restrained demand for full-size pickups and sport-utility vehicles that were the mainstays of Detroit’s Big Three automakers. U.S. jobless rolls reached a 26-year high in the week ended Dec. 20, signaling a worsening labor market as the economy heads into the second year of a recession.

Toyota, punished by an aging lineup of trucks and SUVs, suffered a drop in U.S. market share in December to 15.9 percent from 16.2 percent. Chrysler’s share fell to 10 percent from 13.8 percent as the company said it needed government loans to continue operating.

European automakers as a group outperformed Asian and local rivals in the U.S. last month, claiming 8.9 percent of the market, compared with 8.0 percent a year earlier. The December performance was well above the group’s 7.8 percent market share for the whole year, as small cars attracted consumers. VW’s full- year market share was 2.3 percent.

Daimler AG’s Mercedes-Benz increased market share in December to 2.3 percent from 2.0 percent as sales of the Smart mini-car, new to the U.S. market in 2008, helped offset a 32 percent drop in the Mercedes-Benz luxury brand. Daimler, based in Stuttgart, Germany, said its annual U.S. sales fell 1.5 percent to 249,750. The company sold 24,622 Smart cars.

BMW, Porsche

Bayerische Motoren Werke AG was unable to escape the market weakness, with sales falling 36 percent, keeping December market share flat at 2.4 percent. Still, full-year sales for Munich- based BMW fell just 9.7 percent to 303,190 vehicles, including a 29 percent gain to 54,077 for the Mini brand.

Porsche’s market share was stable in December at 0.2 percent, as sales dropped 25 percent.

General Motors, Ford and Chrysler controlled less than 50 percent of their home U.S. market in 2008, for the first time on record. They held a combined 47.5 percent, according to Autodata, based in Woodcliff Lake, New Jersey.

To contact the reporters on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net; Chris Reiter in Berlin at creiter2@bloomberg.net

Last Updated: January 6, 2009 11:58 EST

http://www.bloomberg.com/apps/news?p...s&refer=europe

LexFather

I just hope VW brings cheaper cars and doesn't continue to price themselves out of their market. The article is also full of spin, they failed to mention that 2007 was a RECORD year for Toyota so sales were going to level off anyway. This bad economy just makes things look worse b/c they had such a great 2007.

I look forward to see what VW does here.

ffpowerLN

iTrader: (1)

Exactly.

Ideally:

VW - mainstream (nothing more than $40k)
Audi - luxury (nothing less than $30k)
Porsche - ultra sporty luxury (nothing less than $60k)

In this case the three brands have the least amount of overlapping so they won't compete with each other. By placing itself as a mainstream brand VW then can focusing on broaden its market share.

However the reality is...

VW - premium mainstream/pseudo luxury
Audi - going down market with the A3 and thinking about bringing the compact models. The new A7 (especially the S and possibly the RS variant) 4-door coupe will no doubt be commending a premium which will compete somewhat with Porsche's Panamera.
Porsche - Doing pretty well by itself but will have considerable overlapping with Audi.

bad co

good for VW, The Jetta imo 20% better than the Civic Corolla etc same with Passat 25% better than Camery Accord Malibu. But than again the prices were a lot higer too. So time to make a more competative product price wise

CDNROCKIES

Just curious where VW sits in reliability?

Not going to be a major player in N.A. until this changes.