US could be the core of Volkswagen’s crisis in Germany image

The confusion that almost made Volkswagen’s Group CEO Martin Winterkorn lose his job the previous week stems from the automaker’s difficult situation in the United States where Volkswagen has made very little progress during the eight years Winterkorn has been in charge.

The whole recent feud between the CEO and the supervisory board head Ferdinand Piech seems to actually come from Piech’s dissatisfaction with the way Volkswagen is doing in the U.S. Analysts agree that the lack of success to get onto the U.S. auto market in spite of large investments stands for a big part in the dispute. Volkswagen invested about $1 billion to build a factory in Tennessee in order to produce an affordable Passat sedan to cater for U.S. customers. The carmaker’s U.S. market share fell 2% in the first quarter of this year, a level which has not been so low since 2009 even with the added tailwinds from the depreciation of the euro in the face of the dollar.
Ferdinand Dudenhoeffer, director of the Center of Automotive Research at the University of Duisburg-Essen notes “That was precisely the core of Winterkorn’s strategy [..] but the results of VW’s high investments are sobering. Piech recognizes that there are no signs for a change in the trend. And it is that much more depressing when you see that VW has been losing market share to niche brands like Subaru in the U.S. despite investing billions there.”

Winterkorn admitted to complacency last month after the initial success of the U.S. Passat, affirming that his management team rested too much on its laurels and became careless. Even if Winterkorn has gained the full support of the Committee after a meeting that took place on Friday, it is uncertain if his contract would get extended after all as he must assure short-term stability and avoid unnecessary turmoil for the Volkswagen Group.

By Gabriela Florea

  • BSmith

    PRICE!!! Volkswagen has always been “premium” priced against the competition. The conservative styling is off-putting in the niche market they are finding themselves in—they fail to stand out or gain attention other than the “bug.” Additionally, stock and availability of certain models is questionable.
    I had been considering a GTI, but the points made are in favor of the Focus ST…will decide in a couple of months which is the “better” vehicle for me.