Volkswagen is gearing up for a major change of course for the US market, with plans focused on new management and a model range a better fit for what American customers really want. A company official confirmed last Friday that VW plans to bring a U. S.-only pickup truck to the US market before the end of the decade. This would seem an acknowledgement that the high-profit trucks and large SUVs still dominate in one of the world’s most competitive auto markets. Marco Schubert, who previously handled sales for premium audi of Volkswagen, will now oversee the US. He will replace Kjell Gruner who is exiting. The change also marks a new beginning as Volkswagen is looking for stronger results after years of inconsistent results in North America.
Thomas Schaefer, the head of the Volkswagen brand, has identified clear growth opportunities in pickup trucks and large SUVs which Volkswagen has largely avoided until now despite strong and sustained demand from the American consumer. The new pickup is speculated to be built in the United States. Volkswagen currently has one of their largest manufacturing plants located in Chattanooga, Tennessee. This plant recently ceased production of the electric ID.4 before the estimated completion date. But, the decision was made due to changes in the US’s electric vehicle incentive policy. Now, the plant is used as a potential platform for future high-volume vehicles that are more compatible with market realities.
Leadership in the company has been considered ideas for more new products to cater the market and the truck would be a perfect idea. It’s also perhaps a little late. They come at a time when full-size and mid-size trucks and SUVs driven by traditional combustion engines are still bringing good margins to the other guy. Ford and General Motors have both recently revised up their full-year profit expectations, citing these vehicles.
It’s not clear that the company has a model that can tackle the current giants of the segment, from pack snatchers like trucks down to the Gulfstream-sized SUVs, in the full-size or the burgeoning mid-size segment. Developing such a model to eat into these high-margin sectors would seem a safe move. It is not yet certain if VW will create the pickup solely via internal resources or team up with a partner.
Time will tell with a decision looming in some weeks or possibly a few months. The Ford work with VW in Europe proved to be faster and less expensive than other projects, and it is easy to see the same type of cooperation not only as a way to have some cost savings but more importantly, to have some expertise brought over from Europe. The investment of time, money and long-term commitment to US market would be enormous for either route. As with Fiat, for VW the move is part of general drive to improve looks and profitability.
The controlling groups surrounding the car makers have recently demanded more radical re-org of the group. It has been brought into sharp focus in the US, where demand for EVs has failed to take off, while customers still prefer the bigger and more ‘all round’ vehicles that combine good terrain ability and comfortable interior. Moving resources in that direction makes commercial sense.
