Volkswagen determined to win back American consumers
Volkswagen America President and CEO Michael Horn debuts the Tiguan GTE Active Concept SUV at the North American International Auto Show, Monday, Jan. 11, 2016, in Detroit. AP Photo
DETROIT, United States—Embattled German auto giant Volkswagen vowed Monday to reconquer the hearts of American car consumers as it struggles to shift focus away from the still-unresolved emissions cheating scandal.
“We are determined to reignite America’s love for Volkswagen,” Herbert Diess, chairman of the Volkswagen brand, said on the opening day of the Detroit auto show.
READ: Volkswagen chief hopes to shift gears in Detroit
Volkswagen’s uncertain journey back into the good graces of US auto enthusiasts has begun with a stream of apologies and is now moving to announcements of fresh investments on American soil and new products aimed at the market.
Diess recalled the 1960s and 1970s when “iconic cars like the Microbus and the Beetle were part of American culture” and “millions of Americans loved our brand.”
READ: Volkswagen shares slide after US government sues automaker
Vehicles bearing the Volkswagen badge once captured seven percent of the American car market before sales plummeted and hit rock bottom in the 1990s.
In recent years, the German automaker had been counting on a major expansion in the United States to become the world’s largest carmaker ahead of Toyota, a goal now shelved after the emissions scandal plunged the company into deep crisis.
However, despite a major product onslaught, the group’s market share remains under four percent in the United States.
Winning trust, sales
The Wolfsburg-based group admitted in September to installing emissions-cheating software in around 11 million diesel cars of VW, Audi and other brands worldwide, including nearly 600,000 vehicles sold in America between 2009 and 2015.
The so-called defeat devices turn on pollution controls when the cars are undergoing testing, and off when they are back on the road, allowing them to spew out illegal amounts of toxic nitrogen oxides.
The US government sued Volkswagen for intentionally violating clean-air laws and accused the German carmaker of obstructing the investigation.
Even before the scandal tainted Volkswagen’s reputation and forced the company to suspend the sale of its diesel cars, the VW brand had been struggling in America with an aging model lineup while competitors posted record sales.
“Winning back trust also means improving our strategy here in the United States,” Diess said before announcing plans to beef up VW’s offerings of sport-utility vehicles popular with American consumers.
Volkswagen is set to invest a further $900 million at its Chattanooga, Tennessee factory to build a new mid-sized sport utility vehicle that is expected to roll of the assembly line by the end of this year.
On Monday, the company also unveiled a plug-in hybrid version of the top-selling Tiguan SUV.
“By the end of the decade, we will be offering at least one SUV in every major segment,” Diess said.
But the emissions scandal is far from resolved, as Volkswagen still needs the green light from the Environmental Protection Agency (EPA) for a recall plan that could involve the buyback of more than 100,000 vehicles in the United States.
Volkswagen chief executive Matthias Mueller told journalists on Sunday in Detroit that he will present a package of “appropriate technical solutions” when he meets with EPA administrator Gina McCarthy on Wednesday.
Mueller also apologized on his first official trip to the US since the scandal broke for letting down “customers, authorities, regulators and the general public here in America,” but insisted that the automaker did not engage in “criminal” behavior.
Volkswagen also faces at least 650 class-action lawsuits from disgruntled US customers and has hired star lawyer Kenneth Feinberg to handle the compensation claims.
Volkswagen America chief executive Michael Horn told the audience at the Detroit auto show on Monday that 265,000 US customers have registered with the company to receive a “goodwill package” of $1,000 worth of gift and fidelity cards.
VW offered the package in November to owners of cars with 2.0 liter diesel engines that violate US emission rules and expanded the offer on Monday to owners of 3.0 liter diesel cars.
“We want to make this right in the American way,” Horn said.
Analysts believe that the German auto giant can overcome the scandal if they come to terms with US regulators.
“I think that the Volkswagen brand is going to prove very resilient,” Kelley Blue Book’s Jack Nerad said.
“I hear a lot of fire about this in industry news and general news, but I don’t hear on the street a lot of people saying ‘I’ll never buy a Volkswagen again’ or ‘Volkswagens are terrible.'”
