DETROIT -- Volkswagen officials refuse to use 0 percent financing or cash rebates to prop up sagging VW brand sales in the United States.
While most European brands are prospering this year, Volkswagen of America Inc. reported that VW brand sales through July were off 15.1 percent.
But VW officials prefer to endure what they say is a temporary downturn rather than risk devaluing the brand or deflating residual values with fat incentives.
The slump is in stark contrast to the growth from 1994 through 2001 when everything seemed to be going right for a reborn brand. (See chart, right.)
Aging products are at the heart of VW's woes. While the brand finally has an SUV in the American market, VW's core products - Golf, Jetta and Passat - are at the end of their life cycles.
Redesigned versions still are 18 months away.
Dealers are concerned.
"Volkswagen grew at such a rapid rate," says Al Gossett, a VW and Audi dealer in Memphis, Tenn. "When we were ready to reload the gun, all we had was the old bullets. We didn't have anything new and fresh, and it's caught up with us."
But VW faces other challenges. They include pricing pressure fueled by heavy incentives from U.S. automakers, a weaker U.S. dollar and layoffs at its only North American assembly plant.
VW executives in Auburn Hills, Mich., say they will tough out the rough sales environment as they prepare for what they call the next round of growth. They say the Touareg SUV, which went on sale in June, should help reignite sales.