Archive for November, 2010

Is Fiat taking VW’s US positioning?

Monday, November 29th, 2010

The week before last, I was in Los Angeles for the auto show.  There were a number things that were interesting, but for me, the most interesting was the introduction of the Fiat 500 to the US market. The Fiat 500 represents the re-introduction of the Fiat marque to the US and thus garnered quite a crowd at the press conference:

As we watched Laura Soave, Fiat’s head of marketing, introduce the Fiat 500, I couldn’t help but lean over to a colleague and say “Fiat is taking Volkswagen’s US positioning.”  The presentation was full of “Italian passion” which might have been code for a youthful, fun, engaged approach to driving.  Here’s a video/ad:

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Why buy a Volkswagen?

Friday, November 12th, 2010

VW is intent on becoming the world’s largest auto manufacturer.  To achieve this lofty goal, the company needs to sell a whole lot more in the United States.

“The company plans to triple annual U.S. sales of VW, Audi and Bentley models to 1 million units annually by 2018 as part CEO Martin Winterkorn’s drive to overtake Toyota Motor Corp. and General Motors Co. and become the world’s largest automaker.”  Automotive News 9/18/09

Based on the VW brand’s 2009 sales (213,454), volume in the US will almost quadruple: “By 2018, VW wants to sell 800,000.”  Automotive News 1/19/09

800, 000 is a heck of a lot of cars for VW.  Especially considering that VW’s biggest volume year in recent memory was 2001, when it sold 355,648 units (in the 1970’s VW did sell roughly 500,000 units).  Many industry experts have questioned the wisdom and even the possibility that VW might sell 800,000 units in the US.

Volkswagen believes that it can sell 800,000 cars in the US by specifically developing vehicles to meet Americans’ tastes: “VW has concluded that price-sensitive U.S. consumers simply aren’t willing to pay for the extras found in a mass-market European sedan.” Automotive News 7/5/10

Consequently, the “new mid-sized sedan, which will be built in Chattanooga, Tenn., is supposed to be bigger and cheaper than the Passat that it replaces… VW wants to make its Passat replacement competitive with the mid-sized segment stalwarts — the Toyota Camry, Honda Accord and Ford Fusion — and thereby boost sales sharply.” Automotive News 7/5/10

This strategy is also evident in the new 2011 Jetta, which has been de-contented to make it price competitive with the Japanese.  The 2011 US version of the Jetta will have drum brakes in the rear and a torsion bar rear suspension.  The interior has also been cheapened to enable it to reach a competitive price point.  The European Jetta has been dumbed down to meet the needs of the “price sensitive” US customer: “European buyers will get a more costly and more upscale version of Volkswagen’s new Jetta sedan than North American customers.” Automotive News 11/1/10

This approach is being mirrored in the Company’s US marketing. When recently searching for a new advertising agency, the VW CMO offered the following rationale: “The Volkswagen brand needs to inspire our base of enthusiasts as well as reach out and captivate those in mainstream America.”  Automotive News 8/18/09

So, Volkswagens will be more mainstream in the US, larger, less expensive and less European, more price competitive with the Japanese marques.  While I am tempted to go on a rant about the dilution of the VW brand and the dangers of chasing volume (see my earlier blog post), let’s skip all that, and ask a simple question:

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2010 LA Auto Show–Press Conference Schedule

Wednesday, November 10th, 2010

WEDNESDAY, NOVEMBER 17, 2010

7:00 am - 8:00 am Breakfast Room 502
8:00 am - 8:40 am Motor Press Guild Keynote Address
– Stefan Jacoby, President and CEO of Volvo
Room 515
8:50 am - 9:10 am Chevrolet South
9:15 am - 9:40 am Volkswagen South
9:45 am - 10:15 am Land Rover/Jaguar South
10:20 am - 10:45 am Mercedes-Benz South
10:55 am - 11:20 am Porsche Petree
11:25 am - 11:50 am Nissan West
11:55 am - 12:15 pm Fiat West
12:20 pm - 12:45 pm Subaru West
12:50 pm - 1:15 pm Ford West
1:20 pm - 1:45 pm Honda West
1:50 pm - 2:10 pm Dodge West
2:15 pm - 2:40 pm Lotus Concourse
2:50 pm - 3:15 pm Toyota South
3:20 pm - 3:45 pm SAAB South
3:50 pm - 4:15 pm KIA South
4:20 pm - 4:40 pm Buick South
4:45 pm - 5:10 pm Mazda South

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