VW wants more vehicles tailored to U.S. buyers

The Volkswagen brand's U.S. product planner wants a more Americanized lineup. His wish list calls for a small, locally built SUV, more diesels and possibly a return of the Phaeton.

Rainer Michel, Volkswagen of America's vice president for product marketing and strategy, sees room for a compact SUV below the Tiguan crossover that would be manufactured here and tailored to local tastes. He also wants a slightly larger SUV, one that might fit between the Tiguan and the mid-sized Touareg SUV.

Any new small SUV would need to be built locally because it is "very tough" to price small cars competitively if they are built in Europe, Michel told Automotive News.

It could get a third row, but VW wouldn't sacrifice styling for the extra space, he said.

A locally built vehicle could be added to VW's factory in Chattanooga, Tenn., which makes the Passat sedan, or its plant in Puebla, Mexico, which makes the Jetta and Beetle.

Meanwhile, VW sees big U.S. growth for diesel drivetrains, including the possible introduction of a diesel version of the Tiguan. Diesels account for just over 20 percent of the VW brand's lineup, but that could grow to 30 percent if a diesel Tiguan were added, Michel said.

"I'm pretty sure we can do 30" percent, Michel said of diesel's potential market penetration. VW's dealer council is even more bullish, he said. It contends that diesels could account for half of VW's sales, he said.

Through informal talks with diesel-injection supplier Robert Bosch, he has heard that "many" other automakers will introduce diesel engines in the United States in the 2013 time frame. "When others help us promote diesel, then really, I think we'll see much more diesels in the market," Michel said.

VW brand is chasing a target of annual U.S. sales of 800,000 units by 2018 and a market share of 5 percent. That's up from 324,402 vehicles and a market share of 2.5 percent in 2011. Through June, VW brand sales rose 35 percent to 208,725 in a market that rose 15 percent.

To get there, the brand needs vehicles tailored for this market, Michel said. That entails, first, making sure they are affordable and meet the right price points for their segments, he said. In addition, in the past, "a lot of people liked the driving dynamics" of VW cars but found them "a little too small," so cars such as the Passat had to be designed specifically for this market, he said.

The biggest contributor to the drive to 800,000 annual sales will be the continued success of the Passat and Jetta. Those are currently VW's highest-volume nameplates, and they will remain so in 2018, he said.

VW also needs to add a top-end luxury offering to its lineup, Michel said. A second generation of the premium Phaeton sedan went on sale in Europe in 2010, and the company is weighing a possible return of that vehicle to the United States, he said.

The first-generation of the flagship sedan was a flop here. It was withdrawn in 2006.

"It's certainly under discussion," Michel said of bringing the car back. "To prove this brand can command this 5 percent premium, we need cars like that."

But the dealer network, the VW of America organization and VW's brand positioning are not yet prepared to support such a car, he said. "We won't bring it until we're ready," he said. "We won't mess it up again."

By Hans Greimel- Automotive News