To be No. 1, VW needs U.S. success

VW made another aggressive move this week, buying fabled design house Italdesign Giugiaro. It's one more step in VW's drive to become the world's largest automaker by 2018.

Now VW needs to succeed in its most important developing market. It's not China, where VW has long had a strong position. Nor is it India, Brazil or Russia. VW needs to become a major player in the United States.

That may sound odd, considering that VW has been here for more than half a century, and that the Beetle and VW logo are iconic here. But VW seems only to have really engaged with U.S. consumer tastes in the last couple of years.

In 2005, VW sent a task force to the U.S. to study U.S. car-buyers. One participant later said he realized that "we are trying to sell products developed for the European market on the American market."

Bingo.

For too long, VW relied on impeccable styling and interiors -- and a general Euro-cool mystique. But its cars were small, a little pricey and didn't always fare well in the quality surveys that U.S. consumers scrutinize.

That combination has limited VW to a smallish batch of consumers. After the first four months of this year, the VW brand had sold 81,418 vehicles in the U.S., putting it in 11thplace. By contrast, the market-leading Ford brand sold 528,198 units.

VW has improved its quality ratings, particularly for the compact Golf-Jetta platform. And it will build a U.S.-sized sedan in Tennessee beginning in 2011. That's when crunch time begins. If VW wants to be the world leader, it needs to penetrate the American mainstream.

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