Volkswagen Jetta Drives Sales Record
The other day I parked next to a Volkswagen Jetta SportWagen and was reminded'”right after receiving a sock to the arm from my eight-year-old daughter'”of what a nice job Volkswagen has done with its current compact. On a global basis, sales of the VW Jetta line have helped VW set a new record by selling more than 4 million vehicles in the first seven months of 2010. Yet I'm still thinking the company's oft-stated goal of selling 1 million vehicles in North America in 2018 is going to be a stretch.
Today's Jetta has an MSRP of $17,735, a big-for-its-segment 170-hp engine, a big reputation for premium interiors and an extensive model range that includes sedan, wagon and TDI diesel variants of each, as well as the VW Golf as a sort of hatchback version (although I realize the two cars are now on different platforms). Anyways, in the TDIs you also get big-time EPA ratings of up to 30 mpg city/42 mpg highway/34 mpg combined.
How does this compare to the current king of the compacts, the Honda Civic? The latter comes with a starting price of $15,655 (without air conditioning), a 140-hp I4, well-recognized quality, a bit less cargo room when comparing sedans and two body styles: the aforementioned sedan and a coupe. The Civic also comes in a high-mileage flavor, leveraging a Honda hybrid powertrain for an EPA line of 40 mpg city/45 mpg highway/42 mpg combined.
The bottom line: Honda sold 23,231 Civics in July, and that reflects a stiff 25.5 percent decline compared to July of 2009; the Jetta, even if you include Volkswagen Golf numbers, found "only" 13,492 customers last month, a drop of 40 units from last year.
If you go with ye olde "glass half full" approach here, you'd point out that Golf sales were up 111.8 percent in July and 97.5 percent on a year-to-date basis, while the Jetta itself is up a strong 11.8 percent on the first seven months of 2010. Then you might say that the July decreases reflect the usual kind of sales decline most vehicles experience when there's a new model on the horizon. And you'd also mention that, based on the last point, monthly sales of 13,492 compacts is a relatively strong showing.
Which brings me back to my main point about the Jetta. Volkswagen, as most industry observers know, plans on achieving a big chunk of its expected North American growth by launching a bigger, less-expensive, heavily version of the Jetta this fall. The automaker is even having the Jetta split off from its European version as an entirely separate, North America-only model. This at a time when many automakers'”like Ford and GM'”are working to increase efficiencies by selling the same vehicles in both overseas and in the U.S.
Now, here's the problem: Let's assume the new Jetta is a flat-out hit that overtakes the Civic (and the Toyota Camry) in popularity and is selling an incredible 400,000 units in 2018. That would still require VW to find another 400,000 units' worth of volume from the rest of its lineup to meet its North American sales goal of 1 million sales. (The "missing" 200,000 units are supposed to come from Audi sales.) And that would require a wholesale reinvention of Hyundai-esque proportions for the rest of the VW lineup.
I mean, Volkswagen's current compact crossover, the Volkswagen Tiguan, is a weak performer in a very important, very competitive segment. There are a lot of sales to be had in this category, with the Ford Escape finding 14,689 customers in July, but it's also been a hard segment in which to gain traction. The Hyundai Tucson, despite all the Hyundai momentum and a 234 percent July sales leap, still only moved 3,698 units last month.
VW sold 1,968 Tiguans in July, and that's not bad for a vehicle that's $4,000 more than the Hyundai, achieves 5 fewer mpg on the EPA's combined mileage ratings and requires premium gas to do that.
But it's not going to help VW reach 1 million annual North American sales in less than a decade.