VW looks inward to solve U.S. sales puzzle

Volkswagen AG's German executives readily admit they are a bit baffled by America, where, despite decades of exertion, Volkswagen's namesake VW brand still doesn't rank as a marquee marque.

So why would the automaker choose a German native and Wolfsburg veteran, Michael Horn, as the new CEO of Volkswagen Group of America, to succeed Jonathan Browning, 54, who is leaving at the end of the year?

To VW insiders and U.S. dealers, the choice makes perfect sense.

They say that if the U.S. division is led by a German CEO who understands Wolfsburg's culture and practices, it may have more luck than it did under Browning in communicating a plan to rebound from a VW-brand sales slide that now stands at eight straight months of losses.

The model is Browning's predecessor, Ste-fan Jacoby, who led Volkswagen Group of America from 2007 to 2010 before leaving to run Volvo Cars. As a German, Jacoby was able to speak frankly to his bosses about the U.S. unit's needs in a way that Browning, a Briton, never could, dealers and sources within the company say.

By the time Jacoby left, VW was in the process of building a $1 billion assembly plant in Chattanooga, with room to expand. It had redesigned the Jetta sedan to American tastes and was doing the same for the Passat sedan.

"We got the factory with help from Stefan Jacoby because he knew how Volkswagen AG works," says Wade Walker, president of Walker Motors, a VW-Mazda store in Vermont. "If you're from the United States and you make your way up to head of Volkswagen, you're not as familiar with the workings of the AG board."

Horn, 51, knows that world well. He has worked for Volkswagen AG since 1990 and as head of global after sales since 2009, before which he was head of European sales. Before that, as head of sales and marketing for Volkswagen's premium vehicles, he helped to launch the Phaeton luxury sedan and Touareg luxury SUV.

Now is a moment when his experience developing products will be crucial.

Volkswagen AG has set a goal of selling 800,000 VW-brand vehicles in the United States by 2018, built around four models designed for U.S. customers: a compact sedan, a mid-sized sedan, a compact SUV and a mid-sized SUV.

Two of those models -- the redesigned Jetta compact sedan and Passat mid-sized sedan -- are on the market and selling far better than their predecessors. But the other two haven't yet gotten the green light .

Alan Brown, a VW dealer in Lewis-ville, Texas, and a member of the brand's U.S. dealer council, is counting on them to arrive. He and his partners are investing $21 million to build a second VW store, in Frisco, Texas, in the outer Dallas suburbs, where SUVs are a must-have product in showrooms.

"Volkswagen AG has a hard time releasing the reins to Volkswagen in America. There's no secret there," Brown said. "I think that with Browning being replaced by a German colleague, that might give us a stronger voice."

Horn is familiar with the United States, having earned a graduate degree here. But he also will be able to rely on Mark McNabb, an American who was hired earlier this year in a leadership shuffle that created the position of COO.

Their first assignment together will be readying the U.S. launch of the next-generation Golf and all its derivatives. Production is about to begin at Volkswagen's factory in Puebla, Mexico, with the first cars going on sale in the spring.

"This is an opportune time to implement these changes in our leadership structure, as the brand is between major product launches and is preparing for the next phase of growth for the VW brand in the U.S.," the automaker wrote last week in a memo to U.S. dealers obtained by Automotive News.

"The progress made over the past several years gives VW a much stronger platform in the U.S. market."