VW Pushes to Top 10 Mil Global Sales – Despite U.S. Struggles

New U.S. plans could prove critical to catching Toyota.

by on Jul.14, 2014

Despite strong sales in China, VW isn't on pace to make its global sales target of more than 10 million vehicles this year, in part because U.S. sales are down.

Volkswagen AG fell a bit short of its ambitious push for global dominance during the first half of 2014, despite its strong and growing presence in China – and its weakness in the U.S. market is largely to blame.

VW reported its deliveries worldwide increased by 5.9%, to 4.97 million vehicles, though if it hadn’t suffered another decline in the American market it almost certainly would have broken the 5 million barrier, putting it well on its way to move 10 million cars, trucks and crossovers for all of 2014.

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But VW is taking steps to rectify its problem in the U.S., the maker on Monday announcing it will spend about $900 million to double the size of its current assembly plant in Chattanooga, Tennessee, to handle production of the long-awaited midsize crossover based on its well-received CrossBlue Concept.

The U.S. is “one of the most important markets” for VW said the maker’s CEO during an online news conference. And turning momentum around after more than two years of declining sales could be critical to VW’s plans to leapfrog global automotive sales leader, the Toyota Motor Co.

(Click Here for the full story on VW’s plans to add the CrossBlue SUV at its expanded Tennessee plant.)

Toyota hasn’t released full sales and production figures for the first half of 2014, but reports from the first five months of the year indicate that the Japanese giant’s sales were on track to exceed 5.2 million units through the end of June. Toyota has been helped by relatively healthy sales in the U.S., but sales in its home market of Japan, where it has lost market share, and in Africa, the Middle East and Southeast Asia also have softened.

With other brands and regions reporting increases, the weakness of the Volkswagen brand in the U.S. sticks out like the proverbial sore thumb. Volkswagen, which needs to broaden its product line, also has gotten tangled up in an unsettling political dispute with conservative political figures over unionization of the workforce at its assembly plant in Chattanooga, Tennessee.

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VW’s senior management, which is under intense pressure from unions in Germany and elsewhere, would prefer to have the workers quietly join the UAW, but is facing strident opposition from Tennessee’s Republican political opposition.

VW is hoping the news that its CrossBlue Concept will be assembled at its plant in Chattanooga, Tennessee, will help spur sales in the U.S.

Despite its problems in the U.S., Volkswagen is the leader in the growing Chinese market, remaining just ahead of rival General Motors, while Toyota continues to lag behind its German and American rivals in what is now the world’s largest automotive market.

“The Volkswagen Group showed satisfactory development in the first half year even though market conditions were at times difficult. However, the economic environment in some world markets remains “tense,” said Christian Klingler, VW’s head of sales, from corporate headquarters in Wolfsburg.

Klingler also said the Volkswagen Group is entering the second half of the year with confidence.

VW managed to increase its sales in Europe by 6.9% as demand in Western, Central and Eastern Europe began to recover after the region’s worst slump in a quarter century. Sales in Russia, which have been overshadowed by the diplomatic tensions over the Ukraine, dropped by 8.5%, however.

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Overall, VW sales in North America dropped by 3% and sales in South America fell 22% because of the economic slowdown across the region. Sales in Brazil dropped by 18%.

Sales in the Asia-Pacific region increased by 17.5% and the group delivered 1.81 million units in China, the Group’s largest single market.

By brand, Volkswagen brand sales increased by 3.8% while Audi sales climbed 11.4%. The luxury brand also grew deliveries in the United States 13.6%

Sports car manufacturer Porsche increased global sales by 7.6% through the end of June. Demand for models from the Stuttgart-based carmaker was particularly high in the Asia-Pacific region and North America. Sales in both regions increased by 9.1%. Skoda also reported a 12.5% increase in sales for the first half of 2014 and SEAT sales increased by 9.9%. Neither of those brands is sold in the Americas.

Sales by Volkswagen’s Commercial Vehicle unit fell 3.9%, the company reported.

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One Response to “VW Pushes to Top 10 Mil Global Sales – Despite U.S. Struggles”

  1. Jorge says:

    VW is a tough sell in the U.S. when you consider the overall owner experience. The reason sales increased the past few years was primarily lowered sticker prices and competitive leasing. That however can’t offset the negatives associated with the VW dealership and ownership experiences.

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