VW slashes US car prices to gain market share
Volkswagen has slashed prices of some of its more popular car models in an attempt to gain ground in the American market, with a Jetta on sale for less than €13,000 ($18,400) and a Passat available for €15,000 ($21,240).
The VW German site quotes starting prices for the Jetta at €20,900, while the Passat is offered from €24,425.
Wolfsburg-based VW has set itself the goal of becoming the world’s biggest car company by 2018, for which it will have to outpace Toyota and General Motors.
A larger role in the US will be crucial for this – and currently VW is only ranked ninth in the American market which is dominated by domestic and Japanese brands.
Yet the company recently invested €1.4 billion in a new factory in sleepy Chattanooga, Tennessee. It is set to welcome the company CEO and officially open next Tuesday as the hub of VW’s American car-making operations.
Though Chattanooga might best be known for the old Glenn Miller song “Chattanooga Choo Choo”, the city of 167,000 represents a strategic location for VW’s first factory on American soil. It is an important railway hub in the middle of the country and more than 2,000 people will end up working for the company there.
Yet success is not guaranteed, with the quality of the cars being queried. The flagship Jetta has already come under heavy criticism from influential institutions like the US magazine “Consumer Reports”.
“Engineers found fault with its agility, cornering grip, coarse engine, braking, interior fit and finish, and so-so fuel economy,” the magazine reported last month. It quoted a test supervisor calling the car “unimpressive.”
Jonathan Browning, CEO of VW’S American division, has been monitoring the criticism but says he is not worried.
“The car has to prove itself in the market, and the Jetta is a success,” he said.
In April, VW sold nearly twice as many Jettas as last year. It was the best month in eight years for the brand.
But the company is taking no chances, and sparing no expense, in promoting its new image.
Pop star Katy Perry was hired to unveil the Jetta publicly in New York's Times Square and the company bought advertising time during the Super Bowl, a prime time for increasing publicity.
Sales figures may reflect increased consumer interest in the company’s cars. In 2010 VW increased its sales by more than 40,000 units over the previous year. And sales are set to increase this year by nearly 50,000 to around 300,000 cars.
“2011 is a very important year for us,” Browning said.
If nothing else, the company head has taught Americans a little German. VW is campaigning in the US with the words “Das Auto.”