Volkswagen of America
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Volkswagen of America (VWoA) is the U.S. subsidiary of the Volkswagen automobile company in Germany. Formed in April 1955 in Englewood Cliffs, New Jersey to standardize dealership service in the United States, it grew to 909 Volkswagen dealers in the United States by 1965 under the leadership of Dr. Carl Hahn. Under him and his successor as president of Volkswagen of America, J. Stuart Perkins, VW's U.S. sales grew to 569,696 cars in 1970, an all-time peak, when Volkswagen captured 7 percent of the U.S. car market and had over a thousand U.S. dealerships. The Volkswagen Beetle was the company's best seller in the United States by a wide margin.
From then on, however, intense competition from American and Japanese automakers caused VW sales in America to fall as much as 87 percent between 1970 and 1992, despite the introduction of new front-drive models in 1975 to replace the Beetle and its rear-engined, air-cooled stablemates. As a result, the number of dealerships in the U.S. was also reduced to 630 by the mid-1990's. As of 2007, there were 596 operating Volkswagen dealerships in the country.
VW decided to open an assembly plant in New Stanton, Pennsylvania in 1978. This was the first modern venture by a foreign automaker at making cars in the U.S. Unfortunately, due to unfavorable exchange rates, and the fact that the factory mostly built Golf hatchbacks while Americans wanted Jetta sedans, the plant closed in 1988 (very few Jettas were made there in 1987-1988, but this failed to help the plant). A great upheaval occurred in the early eighties as the manufacturing division and the sales division were merged and Volkswagen of America moved to Troy, Michigan as a result, finally settling at their current home in Auburn Hills, Michigan in 1991.
Volkswagen of America's sales hit rock bottom in 1993, with fewer than 50,000 cars sold that year (possibly due to the delayed introduction of the Golf and Jetta III), and many observers expected VW to quit the United States (as many other European vehicle manufacturers had done then). Sales began to recover the following year with the introduction of the third generation of the Golf and Jetta. By the end of the decade, thanks to effective advertising and the launch of more competitive new products, including the New Beetle in 1998, the VW brand was back on firmer ground. Volkswagen of America went on to sell 355,648 cars in 2001, its best year since 1973.
In the 2000's sales have tapered off somewhat due to competition, quality issues and delays in product introductions, and VW's U.S. sales for 2005 totalled 224,195 - a reduction of about 37 percent from four years earlier. New models for the 2006 and 2007 model years such as the Passat, Rabbit, and GTI have resulted in a sales growth of 4.9% for 2006 with sales of 235,140 vehicles. Profitability still remains an issue, though; Volkswagen of America has not turned a profit for its parent company since 2002. In January 2007, Volkswagen of America president Adrian Hallmark publicly stated that he planned to get the subsidiary back to profitability in two to three years. He hopes to introduce new models for North America, and develop new marketing to encompass the whole brand as well as individual cars.
In the meantime, a new advertising agency, Crispin Porter + Bogusky, has helped rejuvenate VW's presence in the U.S. as well. Its ads for the fifth-generation Volkswagen GTI have sparked interest in the brand not seen since the launch of the New Beetle, and ads for the fifth-generation Golf/Rabbit hatchback have translated into initial strong sales for that model. Many observers are expecting VW of America to have a tough year in 2007 as Hallmark works to keep the brand going. Due to new air pollution rules promulgated by the USEPA, the diesel powered VWs with TDI-PD technology can no longer be produced after December 31, 2006. Although VW rushed to put an extra supply of cars on dealer lots before the deadline, there will likely be a period where diesel Volkswagens are difficult to find. For the 2008 model year, VW will be introducing a new generation of diesels with Bluetec technology licensed from Daimler-Chrysler. These are expected to meet stringent air pollution standards in all 50 states.
