FRANKFURT -- After almost two years in the driving seat, Volkswagen boss Bernd Pischetsrieder has yet to convince his critics that he can take "the people's car" back to basics and back to where the money is made.
The scorecard for his first full-year in the job, when a brand-new Golf failed to ignite the enthusiasm of the public and investors, shows a company that is well below par.
Profits at Europe's largest carmaker, which is due to post 2003 results Wednesday, probably more than halved last year, and shareholders are bracing for a dividend cut.
"2003 will be a year to forget for VW management," Dresdner Kleinwort Wasserstein analysts wrote Monday, adding this week's numbers will likely show them running as Europe's second least profitable carmaker after Italian struggler Fiat.
Inheriting an old model lineup and the cost of developing one ensured 2003 would never be a vintage year for VW's boss, but investors worry that disappointing sales and early discounting of the fifth generation of Golfs bode ill for 2004.
Reflecting those jitters, VW is Germany's worst performing blue-chip stock so far this year having lost more than 10 percent.
The Golf's bland design and high pricing mean it may have a tough time rising to the challenges posed by an already notoriously tough global car market, industry watchers say.
"The decisive question is whether the Golf is properly positioned," says HVB analyst Albrecht Denninghoff. "The model is perhaps a bit too expensive given the times we live in."
YEAR OF THE GOLF?
The new car, whose strikingly similar-looking predecessor accounted for about half of the VW brand's profits, will not only be key to reviving earnings but also to silencing critics.
"If 2004 isn't the Golf year then Pischetsrieder is in trouble," says one analyst, who like the state of Lower Saxony -- the main shareholder -- feels VW spent too much time and money on premium cars at the expense of bread-and-butter models.
Having left upmarket BMW over the bungled disposal of Britain's Rover, Pischetsrieder has yet to emerge from the shadow of a predecessor who took VW on a designer shopping spree, buying prestige marques such as Bentley and Bugatti.
Pischetsrieder himself came under fire from shareholders late last year after he revealed plans for a new premium model, despite poor sales for VW's costly, top-of-the-range, Phaeton.
As profits fall, Dresdner says the extravagance has burnt $2.6 billion of cash reserves in two years and may force VW to go cap-in-hand to skeptical shareholders for fresh funds.
It is still too early though to write off a boss whose fate is riding on the success a car with remarkable staying power.
"People forget that the Golf is in the process of ramping up, and I wouldn't judge its potential on the first few months," cautions Patrick Juchemich of private bank Sal. Oppenheim.
In a fiercely crowded market of some 130 rival mid-sized hatchbacks, the new Golf's $19,553 starting price seems high, but then buyers have traditionally accepted paying a premium for the world's second most popular car.
The true test will come this year with the arrival of a new Ford Focus and Opel's Astra, which unlike the Golf has been transformed on the outside.
Drivers will have to fork out about $2,500 more for a mid-range Golf that can match Opel's 90-hp entry model.
If they do, the Golf's three-decade record as a trendsetter that rivals love to imitate will be intact. If not, VW will have seriously underestimated rivals and misjudged a hatchback market that it created but no longer dominates.