Alfa Romeo Forums banner

1 - 20 of 24 Posts

·
Registered
Joined
·
1,219 Posts
Discussion Starter #1
from autoblog / business week

http://www.autoblog.com/2007/07/18/would-vw-leave-the-us-market/

VW's has strengthened its position in Europe as the leading brand, claiming more than 20% market share. In the US, though, VW sales have dropped by an average of 25,000 cars every year for four years, and the company has lost close to a billion dollars each of the past three years. Stefan Jacoby, the former head of global sales and marketing who raised the firm's Euro market share, has been put in the top US spot in order to achieve one goal: breaking even in the US by 2009.

Blame for the slide can be attributed to a variety of factors (and we're sure you readers have plenty of theories about what's wrong with and how to fix VW), but unless they figure out how to get them right, the feeling is that VW could leave the US market. It's almost impossible to believe that the company known for fun, funky cars that drove until the wheels fell of, two cars that have been famous for decades around the world (Beetle and Golf), deep brand equity, and fervent brand loyalty would have to grab its wurst and head back home. Yet the situation was summed up by one exec as: "For the first time in some time, the phrase 'If we are to stay in the U.S.' precedes a lot of conversations at VW."


Seems like it is having the kinds of problems Alfa had when they left. Mainly uninspiring products, poor reliability, and mediocre dealerships.
 

·
Registered
Joined
·
414 Posts
Mainly uninspiring products, poor reliability, and mediocre dealerships.
Very true. The funny thing is that there are several companies whining and complaining about how difficult the US market is while at the same time Hyundai and Kia (and others) appear to be doing well. Basically, if you can't sell cars in the US market, you shouldn't be in business; we like cars and we are very consumer oriented. Figure it out.

Take a look at the current line up: the Jetta looks like a Corolla but is far more unreliable. The Passat has gotten huge (2006+), and I think most people looking for a European car want something a bit smaller, almost European-like, not something that looks and drives like a Buick. The New Beetle is a little old however, I'm liking the new GTI. The Touareg is nice but reliability is dismal.

When will these companies realize you can make up for a lack of reliability by making the ownership experience pleasant when you have to take the car in for service. I've never heard a positive review of a VW dealer.
 

·
Registered
Joined
·
776 Posts
Yeah, right! I am wondering if there is more to this.

1) VW reliability has been apalling over the last 10 years.
2) VW (VOA) could be looking at large class action lawsuits in the coming years.

My wife is the proud owner of the 'Consumer Reports Most Unreliable Car of 1998'. The VW Passat 1.8T. That's right, the oil sludge factory that consumes its front suspension and driveshafts.

I have intimate knowledge of what one of the respondents meant when they said: "The price point versus quality of the cars is wayyyyy off which is problem number 1."

Maybe they could avoid #2 by changing their name to Bertone?
 

·
Registered
Joined
·
2,475 Posts
Seems like it is having the kinds of problems Alfa had when they left. Mainly uninspiring products, poor reliability, and mediocre dealerships.
Alfa was also selling 500 cars annually.

They should have stayed taking a loss to preserve marketing share and identifiability.
 

·
Registered
Joined
·
7,166 Posts
Don't let the door hit you on the way out.
 

·
Registered
Joined
·
1,074 Posts
As I understand it though, the VWs in Europe are built better since they are built in different factories. They are not as bad as what you get in America...unless you score a Wolfsburg (sp?) edition of a particular model.
 

·
Out of the office!
Joined
·
11,649 Posts
As I understand it though, the VWs in Europe are built better since they are built in different factories. They are not as bad as what you get in America...unless you score a Wolfsburg (sp?) edition of a particular model.
VW has production facilities all over the planet. Not all models of VWs are made in Europe:

The Golf/Rabbit is made in Germany
The Jetta is made in Mexico
The Bettle is made in Mexico
The Passat is made in Germany
The Tuareg is made in Slovakia
The Phaeton is made in Germany
The Polo is produced in Brazil

Have I left any out?

When world wide Jetta production went to Mexico, VW sent over a large contingent of Germans to get the build quality up to German standards. I am very happy with the build quality on my Jetta.
 

·
Registered
Joined
·
657 Posts
I love my Mexican Jetta (2006--It doesn't look as much like a Toyota after you spend some time with it). I have had absolutely no problems with it (yet), and it is as close as I could get to a car with soul in this country for about $18,500. It has enough safety features that I can take my kids in it (6 airbags, ABS, great brakes, traction control, roll sensors, blah, blah), it is peppy (lots of torque...not so much HP), it feels very solid, the fit and finish are great, 6-CD Changer, it has a head off of the Lamborghini Gallardo and the block architecture of a Bugatti, nice suspension, and it is one of the VERY few 4-door sedans I can get in this country with a 5-speed manual gearbox.

If it will stay together, I'll be loyal until someone shows me something that is more fun to drive. I drove the Japanese and American competitors, and they were nice and probably will be more reliable, but they just felt like "cars." I did not feel the same as I do in the VW, and I can't really explain why. That is close to the same feeling I get when I drive my Alfa.

I hope they don't leave, but if they do, I'll feel the same way that I did when Alfa left. They are to blame for not figuring out our market (like Hyundai has and Subaru is), so good bye.
 

·
Registered
Joined
·
1,219 Posts
Discussion Starter #12
Yes I suppose Porsche may be a positive influence. I doubt Toyota ever thought their former executives would end up indirectly helping Volkswagen after helping Porsche.

http://www.bloomberg.com/apps/news?pid=20601102&sid=aocgLANzDy2o&refer=uk


Porsche's Success Riding on $15,000 Hatchbacks, Volkswagen

By Jeremy van Loon

July 20 (Bloomberg) -- Porsche AG's 911, a $72,400 sports car, helped make the carmaker the world's most profitable last year. Chief Executive Officer Wendelin Wiedeking says earnings will grow even more thanks to models such as Volkswagen AG's Golf, a $15,000 hatchback.

Having silenced critics who ridiculed Porsche for buying a stake in Volkswagen two years ago, Wiedeking, 54, may extend the luxury car company's share-price gains by raising the stake and using Porsche's influence to transform Europe's biggest carmaker. Porsche's experience in lean production will boost Volkswagen's profitability, while the companies will save by sharing development costs, analysts and investors said.

Sales and profit at Volkswagen, now 31 percent owned by Stuttgart, Germany-based Porsche, have already risen since the initial tie-up, helping Porsche's shares more than double.

``Porsche knows how to take care of itself and stands to gain significantly from its ownership in Volkswagen,'' said Peter Braendle, who helps manage about 63 billion Swiss francs ($52 billion) in assets at Swisscanto Asset Management in Zurich, including shares in both car companies.

Porsche's profit may grow to more than 3 billion euros ($4.1 billion) in five years from 1.39 billion euros in the 12 months ended July 2006, according to Adam Jonas, an analyst at Morgan Stanley in London. He expects the company's shares to reach 1,650 euros within a year, compared with Thursday's closing price of 1,330 euros.

``The collaboration between Porsche and VW is extremely vital to Porsche,'' said Juergen Meyer, who helps manage about 1.3 billion euros of assets at SEB Asset Management in Frankfurt, including Volkswagen and Porsche shares.

Lagging Profitability

Concern that Volkswagen's lagging profitability would crimp Porsche's growth sent the luxury carmaker's shares plunging 10 percent on Sept. 26, 2005, a day after Porsche said it would buy a stake in the larger automaker. Wolfsburg, Germany-based Volkswagen's operating margin was 3 percent in 2005, compared with 19 percent at Porsche in the 12 months ended July that year.

Last year, Volkswagen's margin widened to 4.3 percent as new models including the Eos and the Audi Q7 helped boost sales 10 percent to 5.72 million vehicles. Net income more than doubled.

Cost cutting already begun at Volkswagen by former Chief Executive Bernd Pischetsrieder has included shedding 20,000 jobs.

``Volkswagen has become leaner,'' said Andreas Dittmer, who helps manage about 3.5 billion euros in assets at Apo Asset Management in Cologne, Germany, including Volkswagen shares.

Porsche is entitled to almost a third of Volkswagen's dividend, which was 497 million euros last year. Porsche's profit will rise ``significantly -- and I mean significantly'' this year because of Volkswagen, Wiedeking said on June 26.

Shared History

The two companies' shared history dates back to the 1930s, when Ferdinand Porsche designed the original Volkswagen. Porsche founded the company that shares his name after World War II, and its first model, the 356, was built mainly using Volkswagen parts.

Ferdinand Piech, a grandson of Porsche's founder, and his family control all of Porsche's voting shares. Piech sits on both companies' boards and is chairman at Volkswagen, while Wiedeking and Porsche Chief Financial Officer Holger Haerter also sit on Volkswagen's board. That is enough to help Porsche exercise its influence at Volkswagen, said Swisscanto's Braendle.

Porsche has a loan from a group of banks worth 10 billion euros to increase its stake to 50 percent and can do so without making a public announcement.

Tightening Grip

As Porsche tightens its grip on Volkswagen, the biggest savings may come from sharing technology and development costs.

Since 2002, Volkswagen has built the body of Porsche's Cayenne sport-utility vehicle, which shares a platform with the VW Touareg and the Audi Q7. Volkswagen, now Porsche's largest supplier, will also build the body of the Panamera sports car, to go on sale in 2009.

``Research and development is the biggest cash drain for car companies,'' said Thomas Aney, an analyst at Dresdner Kleinwort in Frankfurt. ``Porsche is going to save a ton of money piggy- backing on Volkswagen.''

The companies are working on gasoline-electric versions of their SUVs, and Porsche may begin offering diesel engines in its vehicles, a technology Volkswagen specializes in, Aney said.

Quality, Efficiency

Porsche also aims to improve Volkswagen's quality and efficiency.

Porsche topped J.D. Power's 2007 initial quality survey, while Volkswagen was fifth from the bottom. Lean production methods helped Porsche's operating margin widen to 26.5 percent in the 12 months ended July 2006, compared with 8 percent at Munich-based Bayerische Motoren Werke AG, the maker of BMW-brand cars, for the year ended December.

In addition to gains from Volkswagen, Porsche plans to sell more of its own models. The carmaker aims to sell 20,000 Panameras a year and to increase sales in China and Russia.

``Growth in emerging markets is the key driver behind the longer-term growth story at Porsche,'' said Christian Breitsprecher, an analyst at BHF-Bank in Frankfurt.

Even as Volkswagen's profit has grown, many analysts are skeptical it will continue to boost Porsche. Volkswagen has excess capacity at German factories and is losing money in the U.S. as the euro has strengthened against the dollar. A dearth of models that appeal to U.S. buyers has also crimped sales in the world's largest car market.

``Risks for VW include ongoing difficulties in restoring North America to profitability,'' said Nathan Kohlhoff, an analyst at HVB Group in Munich.

Analysts' Views

Of 36 analysts surveyed by Bloomberg, 17 including Kohlhoff recommend selling Volkswagen's shares. Thirteen rate the shares ``hold'' and six rate them ``buy.''

Analysts and investors with a more optimistic view say Porsche's track record, including 13 straight years of rising profit, shows that one of the world's smallest carmakers has what it takes to transform one of the largest.

``The influence of Porsche management at VW could prove significant,'' said Avaneesh Acquilla, an analyst at UBS Ltd. in London. ``Volkswagen is increasingly the dominant share-price driver'' for Porsche.
 

·
Registered
Joined
·
414 Posts
I hope they don't leave, but if they do, I'll feel the same way that I did when Alfa left. They are to blame for not figuring out our market (like Hyundai has and Subaru is), so good bye.
It doesn't help when you spend a lot of time and money developing cars that people don't want or understand. The two that come to mind are the W8 Passat and the Phaeton. These are certainly not bad cars but they just don't say 'Volkswagen'. I love our recently acquired W8 Passat but there is no way I would have paid the ~$40k that they wanted when they were new. I also am fascinated by the Phaeton but come'on, $70k+ ($90k for the W12) for a VW? Get it together. Stop wasting time and money on pet projects and focus on your core competencies: affordable European cars.

One thing they really have going for them is their diesel cars. I would love to have one of the 2008 Jetta Wagons in diesel but we couldn't wait another year to get a car. Why in the world would you not be promoting the heck out of the diesel cars, especially the ability to convert them to bio-diesel? Greenies eat that crap up; get on the green bandwagon while it's hot. VW is about the only affordable diesel you can get in the States but just try and find any information about these cars on their website (the 2007's are just hold overs from 2006 until the new blue-tec '08s come out). I guess it's easier to stand on the side lines and say, "look how bad they're screwing up" than it it to actually fix these issues.

On a side note, this may be the first positive review of a VW dealer's service center but I took our W8 in for some service and I was pleasantly surprised with the quality of the work and service we received. Hopefully this will be consistent because I have this lingering feeling that they're going to know me by name real soon! :D
 

·
Registered
Joined
·
1,752 Posts
I'm not a "greenie" nor is my wife, but we are happy with the Jetta TDI wagon we bought new in 2002. It runs on B99 biodiesel and has been trouble free ... except for a seat adjuster part that fell off a couple of years ago and wasn't worth replacing. It parks next to a Jeep Liberty CRD with Italian diesel engine (VM Motori) that we also run on B99.

We more pragmatic than greenie. The cars get excellent mileage (40 highway for the VW and 32 for the Jeep), are pleasant to drive, if not thrilling, and haven't cost an arm and a leg to keep up. The good quality BioD we use helps keep the engines clean, as well as the air. All that and the Jeep tows a 5,000 lb car & trailer combo with ease, up hill and down, while returning 20 mpg.
 

·
Registered
Joined
·
414 Posts
I'm not a "greenie" nor is my wife, but we are happy with the Jetta TDI wagon we bought new in 2002.
Hey with two diesels and a website named "greend.com", you're a greenie! Don't deny your green-ness, Gary! :D:p:D (All tongue in cheek of course.)

I'm far from a greenie myself (in fact, with all this green hype recently, I'm becoming more and more anti-green to a degree) but would seriously consider a diesel as my next car. The 2008+ TDIs that VW is coming out with look very enticing. Unfortunately, there is no current TDI wagon in the VW fleet.

Maybe I'm wrong but it seems that there would be a market for diesel cars now more than ever. I hardly heard about the diesel Liberty (an I think it's been discontinued after only 2-ish years), and VW didn't really promote their TDIs. I see Toyota promoting the Prius like crazy, why not promote the alternative?
 

·
Registered
Joined
·
1,752 Posts
Okay, I admit to a split personality. While I wouldn't be caught dead in a tie-dyed shirt, there is greenness when it comes to recognizing how badly we've (collectively) treated our planet and how it would benefit our country if we weren't so dependent on foreign oil.

I think the best of all worlds -- for the present -- is hybrids that run on electric motors and biodiesel, especially if the biod is made from cellulous or algae. Provided, of course, that we keep enough high test on hand to fuel our Alfas.

In 2002, California restricted the import of diesel cars. The diesel Passat was not available in California, nor was any diesel Mercedes. Our only option was the Jetta and we had to search to find it. It was at a dealership in Santa Cruz, where oddness is not only embraced, but, I think, mandated.

We had to go to Washington State to get the Libby in 2005. I love that it has an Italian motor. The CRDs were only sold for two years. They flew out of the dealerships and it was written that VM Motori couldn't keep up with the demand for engines. Then Chrysler pulled the CRD, ostensibly because it couldn't pass the newer 50-state smog requirements. Others might say it was because they sold as many good CRDs as lemons. I don't know the answer. After 33,000 miles, I'm still very much pleased with ours and have never had a chance to actually talk with another CRD owner. We've only seen two on the road since 2005.
 

·
Registered
Joined
·
1,219 Posts
Discussion Starter #17
I saw one (probably my first) CRD Liberty this weekend in Elkhart Lake, WI after going to the BRIC vintage races. I believe Jeep is reintroducing CRDs, although since GM just bought a 50% stake in VM Motori maybe that will change. It looks like the CRD is only available on the Grand Cherokee now.
 

·
Registered
Joined
·
1,752 Posts
The Cherokee uses a Mercedes sourced 3.0 liter engine. It's just not the same as the Libby when it comes to serving as a tow vehicle for the Alfa. Although ... VM Motori is/was owned by Detroit Diesel, which is/was owned by Daimler. It's all soooo confusing these days.
 

·
Registered
Joined
·
418 Posts
...The 2008+ TDIs that VW is coming out with look very enticing. Unfortunately, there is no current TDI wagon in the VW fleet.
- You don't have the Passat Stationwagon? Or the new Golf Stationwagon, or the Touran Diesel..?

Over here the market is flooded with these unimaginative boxes, yuck. Looking forward to seeing the 190 Bhp/400 Nm 1.9l Jtd w/ sequential turbos that are available in the next Alfas, should prove interesting :D
 
1 - 20 of 24 Posts
Top