« The Next-Generation Honda Fit will Debut this Fall | Main | 2009 Volkswagen Scirocco Spy Photos...The New VW Has Been Caught in the U.S.! »

Is Volkswagen Considering Pulling Out of The U.S. Market?

jetta_2006.jpg
For the past three years, Volkswagen's U.S. operations have lost $1 billion annually. VW has always been up and down in the US market. Before the Beetle was reintroduced 10 years ago, VW was in a similar crisis. Well now the company is having issues again as sales last year slid to 235,000 down from 338,000 in 2002.

Sales of the revised Jetta, Rabbit and Passat models have failed to spark in the U.S., which has forced some executives to discuss the possibility of leaving the US market all together.

According to Business Week, there have been internal conversations that are suggesting that the automaker may eventually close its U.S. operations.

“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.”

Many of VW's problems lie in the quality of their vehicles. Consumers now perceive the quality of VW's to be less than that of their Japanese competitors. J.D. Power and Associates Inc. ranks VW in the bottom 20% for reliability, quality and service. Many more consumers are paying attention to these ratings than ever before, so it is hurting VW.

In addition to the automaker's quality issues, there are issues with the current VW designs. The new models have been perceived as bland and straight copies from their Japanese competitors. One example is the new Jetta that looks a lot like the current Toyota Corolla. VW has lost their distinct quirkiness that separated them from their Japanese and American competitors. Rather than trying to remain different, VW has decided to kill such cool cars as the popular Microbus from the 60's and 70's that was supposed to be introduced. Instead VW has chosen to rebadge a Chrysler minivan. Also look what has happened to the VW Beetle. When it came back 10 years ago, everyone wanted one. Now ten years later it is an aged car that VW barely cares about anymore. VW has forgotten that the New Beetle saved them from extinction 10 years ago.

The one thing that could help VW is next year is the return of the TDI (diesel) engine in the U.S. It has recently been reported that there is growing interest in diesels in the US as consumers are realizing that hybrids do not achieve the gas mileage that many had hoped. So far Honda, VW and to some extent GM have been the main automakers that have announced plans for diesels in the US. VW and Honda will have them on the market some time next year.

Diesels will help, but they probably won't save the automaker. VW needs to address their quality and design issues before they can return to the black in the US. What do you think?

VW's situation in Europe is at the other end of the spectrum as the automaker is now the top selling automaker in Europe.

Full Story:
Business Week

Related Stories:
The New VW Diesel-Powered Jetta Will Get 60mpg on the Highway...Should VW Release a Diesel Rabbit?
2008 Volkswagen Jetta SportWagen Appeals to the Boring Crowd!
The Volkswagen Scirocco May Actually Make it to the U.S.!

Comments (37)

zippy:

This sums it up for me

"VW needs to address their quality and design issues before they can return to the black in the US."

I considered a diesel passat wagon 2 or so years ago and just couldn't get by the horrible reliablity rating VW has in the US.

I think they make very nice looking everyday cars, but the quality and reliability just isn't there.

James:

I don't understand this. I am on my 3rd Jetta and I love it. I have never had a serious problem with any of them and I know several people that are VW owners that love them to death. I do know a person or two that have had some bad experiences with VW but not to where they wouldn't own another or not recommend them. I am a little disappointed with some of the choices VW has made as far as what they bring to the US. They never bring the cool models here... like the all wheel drive turbo diesel Jetta that has been in Europe for sometime now... or any all wheel drive Jettas for that matter. How about the new R36 Passat? VW has some really hot cars but none of them will ever see an American sunrise. Because of these choices my next car will probably be Mitsubishi or Subaru as they have decent all wheel drive sport sedans in my price range. Would love to get an S4 or RS4 but they are a bit too much $$. Come on VW... bring the goods to the US and you will be fine.

suppa duppa:

I have owned several tdi's and never had an issue with any of them (3). i drove them for 10-20k and sold them for more than what i put into them they are excellent running vehicles. if vw would bring these back and increase the gas mileage 60+mpg as was recently stated on the torque report they would not be able to supply enough of them. these would sell much faster than hybrids. same with mini cooper diesel, if they would bring them over too they would sell like hot cakes

zippy:

I want to get one, but they almost universally get bad knocks for quality by the likes of CR (go ahead, rip them apart).
I had a new VW fox many years ago and it was not a very good car, but I really don't hold that against them. The fox was not exactly their premiere offering. At the same time I have known people who had no problems with the Fox???????

Anyway, it will take better ratings then what they currently get to pull me out of the Honda and Toyota that we own now and they have been flawless.

Rocky:

Pull out of US? I don't think it's because of their reliability records...they were always poor. Look at Benz or BMW? Same kind of reliability but they still increase their sales.

Problem is due to their marketing. How about a Toureg for the price of Benz ML? Phaeton for the price of a BMW? They had that vision they were going to go "upscale" (what about Audi?) with their products and failed.

The ONE thing that could have saved them was that they should have introduced the Toureg as an Audi instead (Audi Toureg). If they did that; sales would probably increase 3 fold for that SUV. Renaming the Golf to a Rabbit ain't going get it done!

zippy:

Those are good points Rocky.

I have always like VWs styling and I think the new Jetta looks better than the old one IMO.
So styling isn't the issue for me at least.

andrew:

Sounds about right...quality.

I will never own a WV again. My Jetta from hell was my first and last WV.

Snake:

The "quality" issues run hot and cold with VW - sometimes SEVERLY overrated, sometimes not.

I own a 2002 Jetta 1.8T Tiptronic, my first Volkswagen product. I purchased it new in August of 2002. It now has - wait for it - 193,100 miles on the clock.

Early in it's life, before the 50,000 mile mark, it had (only) two of the "issues" with the model - 2 failed coilpacks and 1 broken window. Both were repaired under warranty at VW's cost.

Since then?

Except for scheduled maintenence I have only replaced due to breakdowns: (1) oxygen sensor, (1) battery, (1) thermostat, (1) temperature sensor and (1) vacuum fitting...in almost 200,000 miles (also (2) small plastic interior console latches, but I am counting mechanical repairs).

It is the MOST reliable car I have EVER owned.

I get an average of 30.1 MPG, and that is me doing between 70MPH to 95MPH going to work each day.

It is now due for another tune up, another timing belt (second one, replace every 100,000 miles) and a bushing is needed in the front suspension.

This is unreliable??

Many forum posters "bitch" about the fact that they had to replace the $16 center console latch...and call the car a piece of garbage because of it. Damn childish, if you ask me.

I hope they stay around...my next car will probably be another VW.

D:

My parents had a 90's Jetta and found themselves putting a new engine in it shortly after 50K miles. They loved the car, but replacing an engine that early??

James:

you mean to tell me that after finally finding a "pee on vw" sticker for my car, it wont even matter in the states anymore?

ive despised these cars since ive been road tested. as a mass majority of people i know, vws are (in general, cant speak for the ones i havent seen, just every single on i have seen) are driven by rude people. almost on a daily basis im cut off by them, had my ass ridden, and the normal road rage type stuff on my daily commute.

keep in mind, i dont have the sticker yet... but now it sounds like it wont be worth it anyway...

music to my ears. germans can keep there trash, our road's shoulders cant keep any more of your gtis, jettas, golfs, and other random debris.

Thank you VW cooperate leaders.

Gary:

C&D had an article a while back stating that 65% of VW Jettas go back for warranty work, and the few friends that do have them are prime examples. Nothing too major but a bunch of electrical issues from window motors dying, to sensors going bad, to lights being replaced 3+ times.

If the sales numbers listed above in this article are correct, it means Hyundai is out selling VW but almost 2-1 in the US, OUCH.

ken:

I have owned several old and new VWs, and the older ones that were made in Germany were some of the most reliable cars ever made. The current 01 golf I own is a total pile of crap, probably because it was made in mexico, it has been to the shop more times than I can count. I won't buy another VW from mexico as long as I live. Start bringing them over from germany and I am all in.

kw:

I've some friends who've had terrible experiences with VW's in the last few years. Not only did they have 2 cars which qualified (over qualified, actually) as lemons under the US lemon laws, but they then had to take VW and their dealerships to court because, despite the law, VW still wouldn't make good. (These were two separate households.)

While VW's haven't really appealled to me, I can see why cars like the Beetle, Rabbit and Golf would appeal to some. However, the way VW has treated it's customers in recent years has driven away my friends, who at first were in LOVE with what they perceived as VW.

VP:

We just got a bettle convertible, this little sh*t had to be at the shop so many times. Still having the problems! The GTI we had was not different, shops shops shops.

One other reason, they're too damn expensive for what you get.

Hello, supply and demand! Nobody wants to spen $20K for car that's worth $15K.

Wired_Monk:

I own a 2002 Passat (made is Germany, not Mexico), its got 105,00 KMS. Other than 1 repair covered under a recall, I've never had to repair or replace any parts.

Once the new diesels are sold next year. VW sales will increase. I plan on buying a 2008 Tiguan as long as they don't screw Canadians and ignore the current exchange rates.

JROC:

I think all the reliability problems are because american VW's are made in Mexico and the ones in Europe are actually genuine German made. I used to own a 1990 Jetta that was genuine German made and the car was amazing and 1992 was the last year north america had genuine german made VW cars after that they were made in Mexico and everything has gone down hill from there. I have heard nothing but negative comments about mexican made VW's. And if people disagree with me how come the same cars here in North america are crap, but over in europe they are some of the best selling cars. Another reason is their design, VW's are known for their distinct look and they completely destroyed that with theses new cars.

Wired_Monk:

Actually, only the Jetta and Rabbit (Golf) is made in Mexico. All other VW's are made in Germany, including the upcoming Tiguan. That being said, the Jetta and Rabbit (Gold), are know to be much less reliable than the other VWs.

Dale "Termite":

First off, I think Europeans need to stop believing that us "stupid Americans" don't want small cars. They need to stop watching political TV and start paying attention to the bigger picture. There is a growing population of Americans who aren't worried about going big and stupid, and are becoming more aware of the need for efficiency along with style. Most Americans now don't want anything to do with "American" stereotypes or standards.

Yes VW has had their "history" of being known for having bad electrical components. That isn't to say VW's don't last and last and last when taken care of. Such goes for any make. My 84 GTI has 315,000 original motor miles and still going strong! They did make a HUGE mistake when they made the new Golfs resemble a Honda hatch. Some designer started working for your company with the intent to destroy you. Fire that JDM spy! When German engineering is assembled by people who don't have the same work ethic as the meticulous Germans, you get poor quality. I'm sure you know what country I am talking about.

I challenge you, VW, bring 5 of each vehicle in your global product line to the US for sale, and I bet you they are all sold. Most people aren't buying your new products because you ruined them! I agree with another poster that you should not have lost the different look that VW had.

Think about this... those who's voice matters usually don't speak, while those who speak just want attention. ie: statistics are useless!

Jim:

Totally agree about the small car comment. I have a 2000 Jetta TDI and love it. The new Jettas look bigger to me and I do not want a bigger car I want one that gets 55 to 60MPG.

Jim:

Totally agree about the small car comment. I have a 2000 Jetta TDI and love it. The new Jettas look bigger to me and I do not want a bigger car I want one that gets 55 to 60MPG.

Ari:

I recently purchased a 2007 VW GTI and think it's one of the best cars I've ever owned. To the person who said the problem is that all VWs for the U.S. are now made in Mexico, you should look at them now. My GTI was made in Wolfsburg, Germany.

So far, it's been a thrill to drive and the fit and finish is far superior to any of the many different American and Japanese cars I've owned!

Larry:

What a surprise, I thought VW was about to cash in by being one of just a few companies to offer a diesel engine.

I think of VWs being fun to drive and having some understated style. I did know the quality was not up to the Japanese competition but the fun factor seemed to balance that out.

Todays buyers demand reliable cars. Volkswagen seems to have screwed up big time.

Remy LeBeau:

Someone above mentioned Consumer Report as rating VW low - but I've got to say that I've seen some very poor testing done from time to time by CR. For instance, even though there are only a handful of parts similar between the BMW Z3 and Z4, CR classifies them as the same car and knocks the Z4 for the flaws of the Z3. Now, regardless of if you like BMW or not, you have to admit that it's pretty poor testing to claim two dissimilar cars are the same and then penalize one for the short comings of the other.

However, I've seen CR only hating on some VW's, not all of them.

jason riddell:

in Canada vw NEW style rabbit / Jetta ARE from Germany
only the "city" models are Mexican

(city gulf / city jetta are the OLD model still imported)
I find vw's have gone TOO upmarket without delevering anything for the cost ie 5 dr rabbit is 20k
where as a focus or toyota yaris 5 dr hatch is 18k/15k

Phil:

I think VW and their brands have been confused about the US market for a number of years. If you look at their push into the upscale market with VW when you've got Audi with a strong presence in that market, if you look at Audi pushing down into the traditional VW market with the A3 and A2 (not sure if this is coming to the US anytime soon) and Audi pushing into the exotic sports car market where they have Lambo and their partnership with Porsche... Not to steal a page from the US auto makers but if VW meant great MPG practical cars, Audi meant sporty luxury sedans, and Lambo meant exotic sports cars it would make sense and the brands could play to their strengths instead of focusing on eating their own business.

Having said that I own an 2003 A4 3.0 and I love it. The build quality, reliability, performance and handling are all top notch. Audi will be at the top of my list when I need to get another sports sedan. I do hope that VW stays in the US and gets the focus that it'll need to distinguish it's products again, but it's going to take years to get there...

Paul J. Stiles:

I have owned two VWs in my life. I was a bit underwhelmed by the quality.

"German Engineered" is nice but where and how they are built counts even more.

Paul

Rich:

I have owned VWs for 23 years, they have served me VERY well. VW is an A** backward company for two reasons in my opinion. First, they have had WONDERFUL diesel technology for years. They bring the Passat TDI to market for 96 and 97 in limited distribution, don't advertise it and then remove it for 8 years. What a way to get a following. Second, if you look at the U.K site for example (www.vw.co.uk), you can get any configuration you want. Here? NO!, you can have and transmission you want as long as it is AUTOMATIC!

Ron:

I think the biggest problem is the marketing with VW USA. 1st Beetle has been here for too long (the look). ya there is some changes on the bumper and add 1.8T. So what! If you seen the car for 10 years you get sick about it. Not so exciting!!! As for the GTI it as lost it identity. GTI Vs A3? When you spend extra $1000 you can get an Audi, why get the VW right! What's up with that? Do you see a Corolla sold as Lexus. And what's up with Rabbit? Where is the good old Golf. Why downgread the Rabbit? Please! Don't get me wrong. I love VW. And yes I am deriving a GTI. It is a fun and safe car. So what VW are made form Mexico, but so do Mercedes-Benz are made in Mexico too.

Longdxcommuter:

VW's have always seem to a study of conflict to me. I have always enjoyed the handling of the cars and unique european styling. VW's also have a rapid following both in sport compact crowds and in racing circles (SCCA solo, etc).

However, VW has lost much of their quirky identity in the past 10 years. The Passat could easily pass for a Japanese midsize car. The Jetta/Rabbit have gained weight and lost alot of the solid handling of the previous generations. The Beetle (new) was sales gold for many years but it's styling is stale now. And most importantly, the reliability rating have been consistantly subpar (whether it is entirely true or overinflated). This has been a huge damper in selling new cars. The marketplace has no room for inferior reliability. Essentially, a consumer can purchase a new vehicle from US, Japan, Korea and be reasonably assured of vastly improved reliability from cars of 10 years ago. VW still has a quality stigma to overcome ( It has taken matters into their own hands by assembling the Rabbit in Germany to improve quality.- a positive sign to me because it is not an inexpensive business choice).

I would like VW to stay in the US because of their long history and hopefully VW will return to its iconic styling/handling models of yore.

Snake:

"ive despised these cars since ive been road tested. as a mass majority of people i know, vws are (in general, cant speak for the ones i havent seen, just every single on i have seen) are driven by rude people. almost on a daily basis im cut off by them, had my ass ridden, and the normal road rage type stuff on my daily commute. "

Hah! Where I live, I *always* get cut off by Toyota Camry's (usually driven by women), Nissan Maximas and BMW 3 series. They are ALWAYS weaving in and out of traffic!

Snake:

The 1999-2001 Beetle / Jetta / Passat were indeed problems, due to third party electrical part supplied failures. The MAF, the O2, the coilpacks and the window lift mechanism (not the motor, the clips on the window itself) were all known problems.

That is where a lot of people had problems.

Also note that CR's ratings are hogwash - they do not finely break down their surveys to accurately gauge if the claimed "breakdown" is severe (car disabling) or not. A problem with an interior light is held at the same level as a blown central CPU because they don't ASK that question. They simply ask for "electrical problems" and then compute the statistics. Again, replacing 3 rear taillights (as noted by another poster) is "seriously poor quality"? I, personally, don't rate such small pissant things at that level - I want to know MAJOR issues that can strand me, or damage the car, or cost a lot to repair. A $1.50 bulb is not - to me, at least - that big a deal. Buy better bulbs next time!! ^_^

NoDos:

I have to agree with many of the above arguements that the quality issues is because of outsourcing to Mexico. I use to work for a plactic injection molding company that made engine parts for Volkswagon. Mainly the Passat. We had plenty of quality issues coming out of the plant in Mexico. To keep things short, I wouldn't buy a VW from what I know of the parts going into them.

Same goes with Audi. Has anyone ever owned a reliable S4 with the 2.7T? I didn't think so. My friend owns a Jetta GLI and its only got 60k on the odo and theres already a nasty engine knock. He's going to trade it in so he can pass the problem on to some of those VW die hards. Have fun!

About the designs. They all look the same as ever. Nothing interesting. But then again they do let everyone know it a VW.

Mike:

I have a city golf and it is made in Brazil not Mexico and the rumors within vw that they plan to open a factory in Canada to produce the city cars. The Brazilian made golf is good and I have had no problems with it so far.

c0sm0420:

In Canada the type 4 Golf and City Golf are made in Brazil. I have owned a type 3 Golf and a type 4. The type 3 from Brazil was fine mechanically but the interior build quality wasn't that great. The type 4 had lots of temp sensor issues and the mechanic ended up telling me to ignore the engine light!

Overall I bought a Subaru Impreza to replace the type 4 Golf as it was about the same price with way more options and AWD as a Rabbit.

VW thinks they are special but they aren't, they need to be more competitive.

And what's with calling the type 5 a Rabbit again and having the whole City line? Sounds like they are trying to distance themselves from the Golf. Why didn't they just introduce the Rabbit with a better price? And why do we have to wait till 2008 for a diesel Rabbit?

Burt:

Mixed feelings for me...

As the previous owner of VWs, I have to say that VW has quality issues. I bought the VW to test my "ability" to endure diesel. I loved the diesel bit but not the little things that went wrong on the Jetta. I had a rust spot about 7 months after I bought it new. The dealership guy said, no problem, it's covered if it perforates. The trunk had isues in extreme cold. MY BMW and other cars never had that problem in so short a time. I now drive a MB E series diesel and can't complain. It's wearing down with 300k miles on it, but it's logical and gradual. Unlike the VW, it didn't happen out of the showroom...

I do love the Audi look though. If Audi/VW were to try to address the issues (or perception of issues) with quality I may be willing to try them again.

John:

I'm assuming from your comment that it's NOT a NEW MB e class, since they are $60,000 new and 300k miles in just a few months is incredible because I don't know who would go from a BMW to a 25k jetta to a $40-60k MB unless they were older used cars. And of course older cars will have problems if not taken care of from the start.

The new MB are way overpriced for the low mileage they give back which is in the 25-35mpg range.

Luis:

I highly doubt that VW's quality issues is due to manufacturing defects alone, although I don't contradict the manufacturing quality issues. I have been driving a VW Jetta for 5.5 years / 84K miles, and any manufacturing defects with the car would have been noticed while the car is still new. I have never had any major issues with it during the 1st 3 years of ownership. I am having tons of issues with it now: MAF sensor failing, vacuum hoses breaking, cooling fans failing, and other issues due to component fatigue/failure. This tells me that the parts are not ENGINEERED to have a high MTBF.

I will soon be replacing my Jetta with a Toyota Camry, Nissan Altima, or Honda Accord. This Jetta will be the last European rip-off garbage I buy for as long as they have quality issues.

Post a comment

The Torque Report is part of Bestofmedia LLC