January 07, 2018 12:00 AM

Why VW sliced its Tiguan prices

The redesigned 2018 Volkswagen Tiguan gained a third row to help it compete in the hot U.S. compact crossover market. Price cuts are intended to give it another competitive boost.

Volkswagen has spent decades trying to recapture the magic that in the late 1960s allowed it to sell nearly 600,000 vehicles a year in the U.S. — with just two models, the Beetle and Microbus.

Now, with new independence granted from headquarters in Wolfsburg, VW's North America CEO believes the key to success is to put the "Volks" back in Volkswagen.

Last week, VW lowered the sticker price of its new three-row Tiguan crossover, telling its 651 dealers that the move would allow them to conquest customers in the highly competitive compact crossover class.

The reductions were not small: The base S trim was cut by $600 to $25,495; the midlevel SE trim was reduced by $2,180 to $27,650 and the SEL trim was cut by $1,460 to $37,150. The price on the top-level SEL Premium model was unchanged.

Dealers were told the change is effective immediately and that new Monroney stickers for existing inventory would be mailed to dealerships.

Woebcken: More independence in North America

The pricing move was the latest in a series of steps taken by Volkswagen of America boss Hinrich Woebcken in the last year to reposition the brand in the U.S., allowing it to compete head-to-head with domestic brands such as Ford and Chevrolet.

It follows VW's introduction last year of a six-year, 72,000-mile bumper-to-bumper, transferable warranty — first with the three-row Atlas and Tiguan crossovers, and later extended it to the remainder of its lineup.

That after two notable decisions: to leave the previous generation Tiguan in market at a new entry-level price to lure new customers and to give the Atlas an Americanized name in North America.

Nicer price

Cutting prices on the three-row Tiguan is aimed at making it more competitive for cross-shoppers in a crowded segment.
Trim	Price (inc. shipping)	Reduction
S (base)	$25,495	–$600
SE (mid-level)	$27,650	–$2,180
SEL (high)	$31,990	–$1,460
SEL Premium	$37,150	Unchanged
Tiguan Limited (2-row)	$22,860	Unchanged
Source: Volkswagen

Taken together, "it demonstrates that this is really an independent company here in America," Woebcken said in November. "We really have all the levers in our hand to now, not only listen to the demands of the [American] market, but also really implement them. That's what we're going to do in the future."

The VW brand's U.S. sales fell 19 percent in December but rose 5.2 percent in 2017 to 339,676 on the strength of a 62 percent surge in light-truck volume with the addition of the Atlas and three-row Tiguan to its U.S. lineup.

Volkswagen will introduce a redesigned Jetta at next week's Detroit auto show that will come to U.S. dealerships later this year, as will the Arteon, a luxury sedan to replace the discontinued CC in the U.S.

The redesigned 2018 Volkswagen Tiguan gained a third row to help it compete in the hot U.S. compact crossover market. Price cuts are intended to give it another competitive boost.

The lower stickers should help the three-row Tiguan in head-to-head comparisons that many shoppers do on third-party websites.

The redesigned 2018 Tiguan, which is about 10 inches longer than the previous model, went on sale in the U.S. in July and racked up U.S. sales of 21,023 through year end. Together, the pair of compact crossovers ranked 13th among 17 active nameplates in the 2.7 million-unit, nonpremium compact crossover segment in 2017 with 46,983 sales.

The segment — one of the most crowded and contested — grew 6.2 percent last year, but has become especially competitive. In 2017, eight nameplates in the segment — the Toyota RAV4, Nissan Rogue, Honda CR-V, Ford Escape, Chevrolet Equinox, Subaru Forester, Mazda CX-5 and Hyundai Tucson — each generated U.S. sales of 100,000 or more.