The push to expand its network comes as VW readies a product offensive to reverse a two-year U.S. sales decline, starting with a new midsize crossover debuting in the first quarter of 2017 and a redesigned, long-wheelbase Tiguan compact crossover that arrives in the second quarter of 2017.
A redesigned Jetta compact car is scheduled for a late-2017 U.S. sales launch followed by a redesigned Passat arriving in 2018, Horn told reporters.
“The growth strategy starts with the product, and then continues with the dealer network,” Horn said. “Our dealer network compared to other transplants is considerably lower, which for the time being due to the volume makes sense. But now with the SUVs, which are confirmed, we can step this up.”
Speaking to reporters a few hours after the 2015 Golf won the North American Car of the Year award, Horn outlined several U.S. initiatives to rejuvenate the VW brand that began under his watch, including:
- A new high-level board committee to make more strategic decisions locally.
- A new engineering and development center at VW’s plant in Chattanooga, Tenn., that will eventually have some 200 engineers working on vehicles for the U.S market.
- Shortening the life cycle of VW’s passenger cars, which starting with the redesigned Jetta in 2017, will be redesigned every five years instead of every seven.
Said Horn: “The U.S. market now is a key focus of the Volkswagen Group. It’s the most important market for us to get our further growth.”
VW’s roughly 650 franchises is the most the brand has had in the U.S. since 1993, according to the Automotive News Data Center.
VW’s falling sales have been a headache for VW dealers, many of whom have invested millions of dollars in new, larger stores in recent years to prepare for the 800,000 annual vehicle sales that VW targeted for 2018.
“There’s probably 25 to 30 percent, depending on which month you’re looking at, of our dealer body that is struggling to be profitable,” Alan Brown, chairman of Volkswagen’s national dealer council, told Automotive News in a December interview. Brown also is general manager and partner in Hendrick Volkswagen Lewisville, a high-volume dealership in suburban Dallas,
Despite the challenges, Brown says he and other dealers are encouraged by the steps VW has taken, since Horn became CEO, to turn its U.S. fortunes around.
“There is no question that he has an understanding of how to navigate and get the problem-solving aspect of the issues here for the United States communicated, processed and approved in Wolfsburg,” Brown said. “He has done a phenomenal job accomplishing that.”
'Heaven for me'
The network expansion is a big bet that VW’s product offensive will yield major increases in sales. Working in its favor, Volkswagen will build each of its four core models -- the Jetta, Passat, Tiguan and the still-unnamed midsize crossover -- in North America once the next generation Tiguan and new midsize crossover start production.
“That’s heaven for me, because this is the basis of our strategy -- those four core models, designed and built for this market,” Horn on the sidelines of a VW event Sunday evening. “We will never get beyond or to the 800,000 cars if we don’t grow in the four core segments.
"We have to grow, significantly, and also with the dealer network, and we will do this.”