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VW slashes US car prices to gain market share

The Local · 20 May 2011, 15:51

Published: 20 May 2011 15:51 GMT+02:00

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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.

Story continues below…

“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.”

The Local/DPA/mdm

The Local (news@thelocal.de)

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Your comments about this article

19:24 May 20, 2011 by Karo2
" . . . the city of 167,000 represents a strategic location for VW¦#39;s first factory on American soil."

Better do some research: VW built cars at its Westmoreland, Pennsylvania, plant from 1978 to 1988. Sloppy reporting!
20:03 May 20, 2011 by Lisa Rusbridge
Exactly right Karo2. They weren't the original builders of the factory (like they are in Chattanooga), however the Westmoreland County commissioners lured them to New Stanton (Westmoreland is the name of the county, not the city) with a decade long tax-break incentive and after the incentive expired in '88 VW pulled out and the factory was closed. I remember it as a kid and It left a lot of people on the unemployment line and receiving food stamps to survive. I suppose car sales were declining as well, but most folks here thought they were being shafted because VW happily accepted the tax break then shut down once they would have been forced to start paying their fair share.

For what it's worth the same thing happened again, except this time with Sony. They were in the same building for 10 years then bailed out. Not sure if the genius county commissioners got Sony in with the same sweet deal of 10 years here tax free, but after 10 years they left as well.

I've driven past the Chattanooga plant a few times and it is quite nice and in a nice part of the country. Just hope they make a decent car, so people will buy it and keep the 2,000 people who have jobs there employed.

One last thing: Katy Perry is VW's plan for leaving nothing to chance and sparing no expense in promoting their cars? Who on earth is Katy Perry and what does she know about cars??
20:04 May 20, 2011 by MfromUSA
VW would be very wise to take seriously the findings of Consumer Reports, as this is an agency that virtually all Americans respect.

I never but a product that is rated better than excellent by this company. My co-workers pay the same attention to quality when making purchases.

If VW wants the market that will initially buy their products while ignoring the ratings of Consumer reports, then go for it! however, the people who buy these vehicles will NOT be a repeat customer if the product ends up being poor.

I say this because I was a VW fanatic in the 1960's and 1970's. I had a VW bus that was fantastic. After the bus finally wore out from old age and very high miles, I did my research on new vehicles.

Result= too many issues with VW vehicles. I was very disappointed.

I LOVE VW, but they MUST greatly improve quality or I will NEVER buy again.

Now, I only buy Japanese.
06:08 May 21, 2011 by jaredtravel
VW is completely out of touch with the U.S. car buyer. I've own a 2005 Passat with less than 60,000 miles on it and I can tell you I wouldn't consider replacing my current vehicle with a VW. There are no VWs on the market that are even close to being fuel efficient 30 mpg doesn't cut it. Where's a VW hybrid or electric car? VW does a horrible job of maintaining a relationship with the American consumer. The only communications I get are repeated recall notices and stupid catalogues of VW promotional items. BUILD A QUALITY VEHICLE THAT IS FUEL EFFICIENT. STOP USING INFERIOR PARTS. I never thought I would say it - but I'm actually thinking about purchasing a Ford Escape Hybrid to replace my Passat. VW doesn't get the American consumer.
23:35 May 21, 2011 by lordkorner
blah blah blah
03:50 May 22, 2011 by DOZ
Good Luck with that. Poor product lines and renewed support of American Products is a stumbling block in the U.S. Market. I personally wouldn't buy a V.W. made outside of Germany, nor would I buy a Made in Germany Volkswagen if I had to service it outside of Germany. I guess that means I wouldn't buy another V.W.
05:44 May 22, 2011 by jmclewis
American Mechanics 95% are frauds and ignorant they cannot fix anything complex or foreign. I have had problem with tire balancing, brake work, timing belts. ......... all this on a Subaru. They strip bolts they fail to tighten bolts........ They pay allot for education at tech schools learn nothing and have a ton of debt. I see this at the dealerships and independent shops.
18:31 May 22, 2011 by jack pontiac
So much for this Article. I see a lot of BIAS here!

Having owned a '02 Jetta Diesel, and now a '09 Jetta Sportwagen Diesel. The '02 was terrific. The '09 is better ! 3300LB car and you can get 57MPG on the highway. A very powerful 140HP diesel that produces 238ft/lbs of torque @ 2500RPM. No Japanese or American Car can come close to the Engineering, Fit and Finish, or Fuel Economy.
07:33 May 25, 2011 by nolibs
I don't know if German VWs are built with better parts than US Spec VWs, but I can say that US VWs I know about are money pits. Just search online and you'll come across scores of posts noting all the problems that occur. ABS controllers go bad (€1100 to fix), steering linkages, catalysts go bad, eats oil, A/C condenser failures...not to mention numerous small problems as well.
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