While eyes have been trained on the drama in Germany, VW quietly posted another rough quarter in America.
U.S. sales of VW dropped 2.7% to 30,009. The figure might not appear bad at first glance. However, VW is desperate to move the needle in America, the world’s second largest car market. It cannot afford to slip at all, if it has any chance of achieving that goal. For the first four months of the year, sales fell 7.5% to 109,248. Even luxury-only brand Mercedes did better.
VW’s share of the American market is only 2.1%. That VW could ever catch even a mid-level car company like Nissan is unimaginable. Nissan sold 109,848 vehicles in April, higher by 5.7% compared to the same month last year.
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The one point of light for VW in April was tremendous sales of its Golf line, which has been highly lauded by car critics. Sales rose 206.3% to 5,508. Granted, the versions of the model were not available last year. Nevertheless, VW management has said sales of the Golf line are critical to its American strategy:
“We are encouraged by the performance of the Golf family, delivering the best April in 15 years, and happy to see the momentum is amplified by the addition of the Golf R and Golf SportWagen joining the lineup,” said Mark McNabb, chief operating officer, Volkswagen of America.
Sales of the balance of the line are poor. The numbers for Passat were particularly alarming. Its sales are large enough to be extremely important to VW in the United States. They dropped 28.9% in April to 6,623. Golf’s progress will need to be much stronger to fill in the hole created by Passat.
The two primary arguments about VW’s failure in America are that its model line is too limited and the amount of successful competition is too great. The problems converge. VW only has four primary model lines. Put these against the car companies that do modestly well (and have large model lines), which include Nissan and Hyundai/Kia, and VW barely has a chance to pick up sales. Against the larger companies, including General Motors Co. (NYSE: GM), Ford Motor Co. (NYSE: F), Toyota Motor Corp. (NYSE: TM) and Fiat Chrysler Automobiles N.V. (NYSE: FCAU), VW might as well withdraw from America altogether.
The irony of VW’s U.S. failure is that it is the dominate brand in Europe, with nearly a quarter of the market. It is also a leader in sales in the world’s largest car market of China. The roadblock that keeps VW from being the top car manufacturer in the world is its bad slip in America.
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