Why Isn’t Volkswagen USA Selling More Cars? First Half 2013 Sales Figures Analysis

Why Not Wait For The New GTI?

The fact that a moderate adjustment in Volkswagen USA’s sales goals merits attention at all says something about the allure of the VW brand. A fiercely loyal fan base loves to talk VeeDub, and the talk is often as full of criticism as it is stocked with praise.

Rather than believing they could sell 486,000 vehicles in 2013, disappointing halfway numbers have led Volkswagen to adjust their goals downward 9.5% to 440,000, a couple thousand more vehicles than the brand managed to sell in the United States a year ago. 

Sales in 2013 rose 35% to 438,133, the highest-volume year since 1973 for Volkswagen USA.

Automotive News says Volkswagen dealers are pleased with the lowered expectations, because it allows them to adopt different pricing tactics. In order for a dealer to take advantage of VW HQ’s stair-step bonuses, they would have needed to cut prices too drastically, had sales goals remained high. The lowered goals for overall volume won’t require dealers to compete so avidly for each and every sale.

However, GoodCarBadCar is more interested in discovering how Volkswagen USA hasn’t experienced the kind of growth experienced by the 16 brands which have exceeded the overall industry’s 8.5% improvement, or the other eight brands which have, at the very least, sold more vehicles in the first half of 2013 than in the first half of 2012.

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Source: Volkswagen

VW Model	June 2013	June 2012	June % Change	6 mos. 2013	6 mos. 2012	YTD % Change
Golf	1277	2137	– 40.2%	9062	9939	– 8.8%
GTI	1169	1508	– 22.5%	6551	8986	– 27.1%
Golf R	156	447	– 65.1%	1171	1957	– 40.2%
Total Golf	2602	4092	– 36.4%	16,784	20,882	– 19.6%
Jetta Sedan	12,960	11,598	+ 11.7%	70,511	72,519	– 2.8%
Jetta SportWagen	1853	2006	– 7.6%	10,785	10,684	+ 0.9%
Total Jetta	14,813	13,604	+ 8.9%	81,296	83,203	– 2.3%
Beetle Coupe	1771	2914	– 39.2%	12,710	12,654	+ 0.4%
Beetle Convertible	2009	—	—	8477	—	—
Total Beetle	3780	2914	+ 29.7%	21,187	12,654	+ 67.4%
Eos	430	713	– 39.7%	2441	3688	– 33.8%
Passat	10,874	10,252	+ 6.1%	56,119	55,065	+ 1.9%
CC	1209	1859	– 35.0%	8243	8757	– 5.9%
Tiguan	2452	2885	– 15.0%	15,526	14,940	+ 3.9%
Touareg	642	794	– 19.1%	4330	4514	– 4.1%
Routan	155	1057	– 85.3%	866	5022	– 82.8%
—	—	—	—	—	—	—
Total	36,957	38,170	– 3.2%	206,792	208,752	– 0.9%

First, let’s keep in mind that Volkswagen dealers aren’t offering as many nameplates as they did a year ago. True, the Routan was always a niche player in what is now a declining category, but dealers did have Routans to sell last year. 

Exclude the Canadian-built Grand Caravan copy from the equation, and Volkswagen sales in 2013 aren’t down. Indeed, the Golf, Jetta, Beetle, Eos, Passat, CC, Touareg, and Tiguan have combined for a 1.1% improvement. The Routan’s disappearance accounts for the loss of 4156 sales in the first six months of this year.

Routan: Dead

Routan still excluded, this means Volkswagen only sold 2223 more vehicles between January and June of 2013. Given that dealers were expected to sell 48,000 more vehicles this year, a first-half improvement of just 2223 units surely spooked the bosses.

Hardtop Beetle volume is up by 56 units, but thanks to 8477 Beetle Convertible sales, overall Beetle volume is up by 8533 units, a 67% increase. Volkswagen has also sold an extra 101 Jetta SportWagens this year plus 586 extra Tiguans. 

Disappointingly, Passat volume is up by only 1054 units, a 1.9% increase, as the midsize market has turned in far greater numbers to the new Honda Accord, the new Nissan Altima, and the new Ford Fusion. The Passat sells once for every 3.7 Camrys, and besides the three other faster-selling midsize cars previously mentioned, the Chevrolet Malibu and Hyundai Sonata have already crested the 100K-unit barrier. Kia has sold 83,458 Optimas and the Chrysler 200 and Dodge Avenger have produced 9% and 15% gains, respectively, more than enough to keep the Passat in tenth among conventional midsize sedans.

More problematically, Jetta sales have fallen. The Jetta sedan is down by 1907 units, a 2.8% decline, and the nameplate is off the pace by 2.3%. Predictably, with a new model coming soon, Golf volume has fallen, but the 20% drop (877 fewer Golfs, 2435 fewer Golf GTIs, 786 fewer Golf Rs) isn’t akin to what you’ll see at Toyota. 

With a new Corolla arriving shortly, sales are up 5% in 2013.

Passat: Growing Slowly

Now that the Beetle Convertible is garnering plenty of attention, Eos sales are down by 1247 units. 514 fewer copies of the CC sedan have been registered, and the Touareg’s 4% decline equals 184 fewer sales.

The trend is clearly pointing the wrong direction. And if Volkswagen wasn’t setting its sights so high, aiming for 800,000 annual U.S. sales by 2018, the brand’s inability to outperform a banner year wouldn’t be alarming. 

After all, Volkswagen only sold 154,124 vehicles in the first half of 2011. Compared with that effort, sales are up 34% this year.

But the Volkswagen brand isn’t content with 400,000 sales per year. The question we now must now ask: can Volkswagen USA actually sell 440,000 vehicles in America this year? Quite clearly, they’re not on pace to do so. At the current rate, 435,000 would represent a stemming of the tide.

After a 4% increase in the first quarter, a pace which would have resulted in nearly 456,000 sales at the end of the calendar year, VW USA volume slid 10.3% in April, 1.7% in May, and 3.2% in June. 

As always, much of VW’s hopes are pinned on the Jetta. If the growth experienced by the Jetta nameplate in May and June – 6.8% – can be replicated throughout the second half of 2013, Volkswagen could sell 174,500 Jettas in 2013, a 4500-unit increase. Even assuming the rest of the range remains steady, this would lead to approximately 442,200 sales in 2013, slightly above their newly stated goals.

Meanwhile, Volkswagen Canada sales are up 8.6% this year even as the market’s growth slowed to a 2.2% increase in the first half. Volkswagen has cut Jetta and Tiguan prices and Golf volume has slid just 7.6%.

RECOMMENDED READING
Historical Monthly & Yearly Volkswagen Brand Sales Figures
Historical Monthly & Yearly Volkswagen Group Sales Figures
U.S. Auto Sales Brand Rankings – June 2013 YTD
U.S. Auto Sales Brand Rankings – 2012 Year End
Canada Auto Sales Brand Rankings – June 2013 YTD