VW: Sizzling sales pace to cool
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ORLANDO -- Volkswagen brand expects to increase U.S. sales 11 percent in 2013, executives told dealers at the make meeting.
That target would boost the brand's sales to about 480,000 units this year. It would be a slowdown from the gains of 2012, when a surge in sales of the redesigned Passat helped boost VW sales 35 percent. Industry sales rose 13 percent in 2012.
VW executives and spokesmen would not confirm the 2013 target after the meeting, but several dealers, including Jimmy Ellis, VW's dealer council chairman, confirmed it.
Ellis, who runs two VW stores as COO of Jim Ellis Automotive Dealerships in Atlanta, said executives also discussed a plan to wind down the supply of the sixth-generation Golf at year end. VW sold 40,885 Golfs, including the GTI variant, in 2012, up 18 percent.
The seventh iteration of the hatchback is on sale in Europe. It will arrive in U.S. dealerships next year.
"The inventory's going to be reduced," Ellis said. "I wouldn't call it a black hole, but there will be a slim amount of vehicles in the marketplace for several months" from "the back part of the year to the first part of '14."
That's one reason for the expected slowdown in VW sales. Also, VW's two newest models -- the Jetta hybrid and the Beetle convertible -- are expected to have modest sales.
VW told dealers it intends to feature those products in advertising this year. During the meeting, U.S. marketing chief Tim Mahoney showed three TV commercials that will debut in the coming weeks, two of which focused on the new hybrid and convertible.
In the Jetta hybrid spot, a driver on a highway gets behind a slow-moving vehicle that resembles a Toyota Prius and uses the Jetta's turbocharged engine to pass quickly.
VW also discussed a plan to examine per-unit sales costs at dealerships, with the aim of improving return on sales. Executives said that VW dealers' average return on sales stood at 2.3 percent in 2012, which is "flat or down a little" from the previous year, said Wade Walker, a VW dealer from Montpelier, Vt., who sells Mazda vehicles at the same store.
Walker said net profits have increased because VW dealers are selling more cars, but some dealers still consider their profit margins thin by industry standards.
• Golf will be sold down, with short supplies in late 2013
• VW will examine dealers' per-unit costs
You can reach Gabe Nelson at gnelson@crain.com.
