Volkswagen no longer competitive

[Nick1994]

Guys, read the article carefully.
It is VW, NOT Skoda, Seat, etc.
This was in the making for some time and it is purely a management screw-up. Dieselgate, which cost VW $42 billion really exerted pain.
But, for most forum members it is hard to understand what Skoda did to VW. VW basically made Skoda cheaper VW. You are getting the same vehicle, just it is no non-sense car. Basically, what most people want. Then VW ended up in a situation where Skoda is the preferred brand over VW. I owned two brand new Skoda Octavia's which were basically no non-sense Golf V at that time or Jetta. I did not even think to go the VW route. Also, for whatever reason, VW gave some independence to Skoda, so they managed to introduce their own practical solutions. So now, police in Britain drive Skoda, etc.
SEAT lately is doing really good, Porsche always did good. IMO biggest issue is VW/Audi, and Audi is really not competitive anymore in the luxury segment as it was 10yrs ago. VW is wandering around. Some decisions are beyond ridiculous. They are offering for example Tiguan hybrid models in Europe, but not in the US. They did not push Atlas hybrid although pairing 2.0T would be an excellent choice. Probably platform cannot support it, but the same platform in Europe is utilized for the Tiguan hybrid. Partly is the culture in the US of not stepping in Audi territory and trying to protect Audi like it is some sacred cow. But, Audi is not delivering, and VW is not delivering. So, they definitely need a different approach, but it seems they are struggling to actually find a course and stick to it.

These brands are very different overseas as well.

I was in England last summer and there's lots of Audis on the road but they aren't like here, they're just regular little cheap commuter cars. Doesn't really seem like a luxury brand there.

 

[edyvw]

These brands are very different overseas as well.

I was in England last summer and there's lots of Audis on the road but they aren't like here, they're just regular little cheap commuter cars. Doesn't really seem like a luxury brand there.

They are upscale. I just drove A6 2.0tdi month 3 weeks ago from Sweden to Bosnia and it had cloth seats etc. Super nice car, but more blue-collar than some luxury unit, like upscale vehicles.
They do have some luxury unites and more engine options then here.

 

[97prizm]

Uhm, no they didn't.
On VW.ca, you can still get a Golf R/GTI with a 6 speed manual.

One more shift-for-yourself opportunity bites the dust: A manual transmission in the Golf GTI and Golf R ends with the 2024 model, Volkswagen confirmed today. The information was inherent to VW's announcement of the 2024 Golf GTI 380, a special equipment set standard on every 2024 manual-transmission GTI.

 

[RaymondP]

VW still leads the way in the hot hatchback market, at least in my opinion. Nothing else to touch them. Drive one and see. Tragedy if they drop the manual transmission. Always like their gearboxes.

 

[Cherrybomb]

That whole thing was like almost 8 years ago. Doubtful.

I'll tell you my experience,although I appreciate your reply.I bought a 2019 Tiguan brand new from my H.S. friend.I still have it.Good car.VW raised the warrenty to 6yr-72,000 miles..My friend-salesman in his office,with the door closed,told me VW info.So I got a deal, thats what I cared about.The diesel thing hurt sales,no doubt,thats why warrenty was upgraded for a few years any way.They gave me a good deal.He said"You're not walking away'.Customer confidence?again my little world!The other Grandpa,and his two daughters,2 diesels and one gas.The diesels bought back,all three in something else.Yes,I agree 8 years is a while back and no car company is squeaky clean,but lots of people love their brand identity. Especially what cars cost

 

[fantastic]

VW has the motivation to go electric so their story is not over. Electric options will be competitive.

 

[SC Maintenance]

I read the article differently, based solely on this quote "Among VW Group’s mass-market brands... the VW brand had the highest sales volumes, by far, but the lowest operating profit margins during the first three months of this year, according to a corporate presentation. "

Its not Skoda or Audi or Porsche, or even that the VW cars are not wanted. They just don't make the margin they want on the VW branded stuff.

The big 3 solved this issue by not making sedan's and only selling $80K pickup trucks and overpriced CUV's.

I think its smart on their part to recognize the problem early enough to do something about it? Hopefully something other than focusing only on pickup trucks and high margin EV's.

 

[JHZR2]

These brands are very different overseas as well.

I was in England last summer and there's lots of Audis on the road but they aren't like here, they're just regular little cheap commuter cars. Doesn't really seem like a luxury brand there.

True. You can buy “luxury” brands without all the fanciness overseas. It is a manipulated market in the USA in terms of MB, BMW, and Audi. You also see the advantage taken with Lexus in terms of identical part and labor costing.

The attempt to be overly fancy… that’s also why service and parts costs are excessive.

But you want a simpler version? One that may well be made already? Nope. Good luck, even if you want to order it.

VW doesn’t need more branding in the US. So the other options don’t come over. But more variance in the brands, including higher end brands, would be desirable.

 

[pbm]

they are competitive. it simply depend of what market. and they have very different lineups of vehicles. i find their north American lineup very boring. in Europe, they have incredible lineup of vehicles. they have the mighty Touareg while we have the mediocre Atlas. if i lived in Europe, i would own a volkswagen product.

If I lived in Europe I too would own a VW product.....but it would have a Skoda badge on it.
The Skoda Octavia that I rented a few years ago was a great car and several thousand cheaper than an almost identical VW product. I guess the German 'works council' demand more than their Czech counterparts.

PS: I read that the recent UAW contract settlement will drive the cost of a domestic vehicle (which are mostly pickup trucks) up by $800 to $900 dollars....I wonder how that will affect sales as they are already pretty pricey.

 

[JeffKeryk]

Most of the posts to this thread have been about the cars themselves. This article speaks to VW's poor financial performance. Perhaps review the title and introductory 1st sentence from Wolfsburg:
"Volkswagen’s original brand is “no longer competitive,” the company’s brand chief warned Monday, owing to high costs and low productivity."

Based on the article, here's my takeaway:
Operating margin sucks. Selling a lot of low margin cars is dangerous because you are on risky ground financially. A slight change in COGS could wipe out any profit. Margin is critical in manufacturing.
The transition to EV in old, distributed factories is hugely expensive. Does VW have the resources? Perhaps not with those margins.

 

[Rust_Belt_Pete]

Most of the posts to this thread have been about the cars themselves. This article speaks to VW's poor financial performance. Perhaps review the title and introductory 1st sentence from Wolfsburg:
"Volkswagen’s original brand is “no longer competitive,” the company’s brand chief warned Monday, owing to high costs and low productivity."

Based on the article, here's my takeaway:
Operating margin sucks. Selling a lot of low margin cars is dangerous because you are on risky ground financially. A slight change in COGS could wipe out any profit. Margin is critical in manufacturing.
The transition to EV in old, distributed factories is hugely expensive. Does VW have the resources? Perhaps not with those margins.

RIP manual cars

 

[edyvw]

Most of the posts to this thread have been about the cars themselves. This article speaks to VW's poor financial performance. Perhaps review the title and introductory 1st sentence from Wolfsburg:
"Volkswagen’s original brand is “no longer competitive,” the company’s brand chief warned Monday, owing to high costs and low productivity."

Based on the article, here's my takeaway:
Operating margin sucks. Selling a lot of low margin cars is dangerous because you are on risky ground financially. A slight change in COGS could wipe out any profit. Margin is critical in manufacturing.
The transition to EV in old, distributed factories is hugely expensive. Does VW have the resources? Perhaps not with those margins.

VW has PTSD from Dieselgate. Generally, the German economy has PTSD from Merkel's times. CDU and Merkel convinced them in 2010 that austerity was the only way out of the crisis. In 2007 the EU and the US had equal-sized economies, today the US economy is 40% larger. Most EU countries followed the German model and now they are caught in limbo. Add to that ridiculous push for alternative energy at ANY cost, while relying on cheap gas from Russia, which is not available anymore etc, etc. They are where they are.

 

[JeffKeryk]

VW has PTSD from Dieselgate. Generally, the German economy has PTSD from Merkel's times. CDU and Merkel convinced them in 2010 that austerity was the only way out of the crisis. In 2007 the EU and the US had equal-sized economies, today the US economy is 40% larger. Most EU countries followed the German model and now they are caught in limbo. Add to that ridiculous push for alternative energy at ANY cost, while relying on cheap gas from Russia, which is not available anymore etc, etc. They are where they are.

What you are saying is true, but this article speaks to productivity and mfg efficiency. And what to do going forward in a changing world.

 

[MrWideTires]

After owning a VW Golf TDI (mk7), no wonder why.

A Civic Si was cheaper, bigger, faster, lower maintenance, less issues, oh and got close to the same fuel mileage.. but I could use 87 octane instead of diesel, making my fuel bill actually lower.

If you get a VW it's because you like the brand, not because they're better in any way nowadays.

 

[Oillover]

If you get a VW it's because you like the brand, not because they're better in any way nowadays.

Not necessarily.
Something like a Jetta (comparable to a Civic) is actually more comfortable overall, than the Civic.
It also offers fantastic cargo capacity which (from personal experience) makes for a great road-trip vehicle.
This is echoed by the C&D review below:

On Honda forums one of the main complaints of the vehicle is road noise, especially at highway speeds.

If I ever needed a commuter vehicle, a 1.4 Jetta would probably be near the top of my list (and I generally don't like VW's).

 

[edyvw]

What you are saying is true, but this article speaks to productivity and mfg efficiency. And what to do going forward in a changing world.

There is more to it. The cost of doing business went up dramatically! The war in UKR was a game changer. The energy cost in the EU is ridiculous and the source of the issue is the German energy "strategy." The real problem is that they do not want to acknowledge that they were wrong with their energy strategy, so they are trying to find ways to still implement something that exerts punishment on VW etc. generally their economy!
Add to that the absolute panic in VW since the Dieselgate, wandering around, constantly introducing new strategies, ballooning administration to "prevent" another Dieselgate etc. No wonder their cost is so high. And, add $42 billion to the cost of Dieselgate.
You think this is bad. Obviously, people here did not follow their war with the Bosnian supplier which was their largest part supplier. There is a murder story, car fires etc. It is like a movie. The part supplier at one point dropped them which inflicted real financial pain.
So, the fact that they are not competitive bcs. cost is really not a story anymore, it is just that CNN paid attention to something that has been going on for quite some time.

 

[Pepsibottle1]

VW made some good enthusiast cars. Now they're just about as cookie cutter generic as can be, even the r-line. Brand identity is dead

 

[edyvw]

VW made some good enthusiast cars. Now they're just about as cookie cutter generic as can be, even the r-line. Brand identity is dead

It shows management issues as they do have A LOT of cool stuff.
I mean, in Europe they have PHEV SUV's, yet they are not bringing them here. They have Tiguan PHEV in Europe. Atlas is built on the same platform as Tiguan, yet, the strategy is not to offer Atlas as a hybrid, or at least bring PHEV Tiguan. Their strategy is insane!

 

[97prizm]

VW still leads the way in the hot hatchback market, at least in my opinion. Nothing else to touch them. Drive one and see. Tragedy if they drop the manual transmission. Always like their gearboxes.

The could still sell them here. Not sure why they'd discontinue them with such a high take rate in the USA and Canada. I sold vehicles at a VW dealership years ago. We had some higher up management come from vw corporate. I told them to tweak the Amarok for the US market and they'd have people throwing cash at them. With the plant in Tennessee they would bypass the chicken tax. I had so many vw customers saying they'd love to buy one. They made the passat bloated and then dropped the awd option when many companies were adding this to their lineups.