Q&A: VW USA boss says new models will drive sales in 2005

Detroit. Volkswagen's U.S. boss Gerd Klauss is optimistic about a sales upturn in 2005 even though the VW's sales for 2003 were 10 percent below expectations.

Q: How important is the American market to VW and Audi?

A: The North American automobile market is the VW Group's third largest in sales volume. China has overtaken us, but that was to be expected. Specifically the U.S. market will remain one of our most important regions for growth, where we can earn good money as long as there are no major exchange rate fluctuations.

Q: What was your sales result for 2003?

A: We sold a total of 302,686 cars in the USA plus 38,847 in Canada. The year before we sold 338,000 units in the USA and approximately 43,000 in Canada.

Q: How can this significant sales drop be explained?

A: The overall market has slowed down. Our sales figures have dropped at the same ratio. However, we managed to hold our market share of 3.7 percent. What was difficult for us on the U.S. market, where many new models were launched in 2003, is the fact that our high volume models Jetta, Golf and Passat were close to the end of their life span. Our competitors' high incentives also hit us hard. Luckily we launched the Touareg, which is a major success.

Q: Can you give any figures?

A: In 2003 we sold approximately 16,000 Touareg models and hope to double the sales in 2004. Between 30,000 and 35,000 units are planned.

Q: Were you expecting much higher sales?

A: We were hoping to report a sales figure of approximately 330,000 units.

Q: Will there be an improvement in 2004? The Jetta and Passat are still not getting any younger.

A: We did a few things in order to keep our offers fresh. For example, we will bring the Golf R32 to America -- 5,000 limited edition models at a price of below 30,000 dollars. We managed to convince VW to facelift the US Jetta, and it will also be available in an anniversary edition with 18-inch wheels and sports seats. From June there will be a diesel Passat on offer with a two-liter engine and 136 HP. And from now on there will also be four-wheel drive available for the four-cylinder models, which lowers the buying price by 6,000 dollars.

Q: How will all that affect the sales figures?

A: There won't be any major growth, however. We are aiming at holding the 300,000 mark during this transition year 2004. And we have no intention to increase our incentives this year either. In 2005 there will be a firework of new models and then we will have significant growth.

Q: What discounts do you give to American customers?

A: Our incentives lie between 1,300 euros and 1,500 euros, that's only a third of what American manufacturers offer. Before the end of last year Chrysler for example gave away 6,500 dollars with the PT Cruiser. We will not take part in that, even if it means a lower sales volume.

Q: Are you expecting the discount battles to calm down during the coming months?

A: No, I don't believe that that will happen in 2004, although the American manufacturers keep saying that it will.

Q: Are you happy to make a sales forecast for the coming years?

A: We don't want to give any detailed growth figures for any year but for 2004. However, there will be more growth again.

Q: How much does the weak US dollar affect you? VW financial director Hans Dieter Poetsch expects further losses on the US market for 2004.

A: You need to ask our parent company about information on that subject. During the past few years our American automobile business was very profitable. However, if the dollar is worth 1.26 euros then the parities are no longer right. Of course that has a negative effect on our work.

Q: How does the luxury car Phaeton, which was only just launched, sell in the USA?

A: The car was launched in the middle of November. It has found great acceptance. The Americans don't have any fear of this car. The eight-cylinder version costs 65,000 dollars here; the 12-cylinder is only available in a limited edition at a special introductory price of 85,000 dollars.

Q: Have you got any sales figures?

A: During the first six weeks our 220 Phaeton dealers sold 343 cars. This year we hope to be selling 3,000 units, without specifically pushing the car.

Q: How about the premium model C1 that VW announced? Do you need that on the US market?

A: We are especially keen on this car as it fills the gap between Passat and Phaeton.

Q: What are your plans with the new Audi A3 Sportback?

A: Its US start will take place during the first quarter of 2005. It is possible that the annual sales will reach between 20,000 and 30,000 units. The new A6 will also be launched in the US, already in 2004.

Q: Everyone is talking about hybrid models. Does VW also need this technology on the U.S. market?

A: No. We have exceptional diesel models, which are strongly represented in all categories. Our diesel sales share is meanwhile 10 percent.

Q: Toyota, Honda and Mitsubishi have introduced new pickups at the Detroit Motor Show. Should VW not be represented in that important US sector?

A: Never say never. However, at the moment VW has no ambitions in that direction, especially as the truck business in the USA is a very tight margin business. There will be no room for pickups in our product planning for the next three years.

Q: The Japanese seem to be unstoppable in the USA. What is your estimation?

A: Specifically Toyota is incredibly aggressive, has quality, is quick in regard to the launch of new models and is represented in all segments. Of course one also has to pay attention to Honda and Nissan, but Toyota is the most dangerous. People who don't respect those boys act irresponsibly.

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