Volkswagen Guns For Honda, But Will It Work?
Automotive journalists, despite the number of cars they drive per year, still play a little word association game—especially when they're charged with the odious task of personally recommending a car. Think "Honda," and the first word is "reliability." Think "Volkswagen," however, and the first word will usually the exact opposite, followed by mild swearing. Volkswagen doesn't sit too happy with that, of course. And this should be the part where we say, "but not anymore...now Volkswagen is the new stand-in for reliability." We'd like to say that, but we can't—at least not yet, anyway. Volkswagen wants to be the new Honda in terms of reliability, but while Honda is above the industry average for vehicle dependability, VW sits closer to the bottom. And Honda commands 20 percent of the top ten bestselling cars in America, Volkswagen doesn't have a single car on their list. (The Jetta is America's 11th bestselling car, sliding just under most top-10 lists.) Honda spent most of the 90s slowly, quietly building a reputation for indestructibility, while legions of horror stories abound from faulty electrics and expensive fixes on the Jettas and Golfs that, at least, had wonderfully-crafted ad campaigns. The "German engineering" premium of added standard features is one of the many reasons why Volkswagen is readjusting its market position, coming up with new sales targets, and hopefully, just hopefully—getting its sales up. Volkswagen has its eye set on Honda, and rightfully so. Aside from the occasional S2000 or GTI, the two companies are primarily known for unflashy, practical cars with an emphasis on features and creature comforts. Just as there's the allure of German engineering (as promoted by the likes of Mercedes and BMW) at a mainstream price point, so is Honda's simplicity, inside and out. Both companies have name familarity with the Passat and Accord, Civic and Jetta. "Our biggest competitor here is Honda, since its customer base shares the same core values," said Rainer Michel, VW's strategy chief in America. "We both focus on sportiness and versatility and have high demands when it comes to handling." Honda, of course, isn't the only company Volkswagen is looking at—just the one that shares the most similarities. "Obviously if you're going to gain shares you'll be targeting different brands," said Darryl Harrison, manager of VW's West Coast communications. "Honda isn't the only brand VW is looking at. There are going to be some conquests in there. We’re really focusing on performing in our relative segments, and we’re looking to achieve double digit sales growth in 2012 and achieve our 2018 sales goal in the US." Volkswagen's sales target is clear: 800,000 cars by 2018. (Annual specifics are a closely-guarded secret.) And to do so, Volkswagen is going to have to go mainstream, in line with the rest of the competition, and offer more value: the new Passat is considerably larger than its outgoing model, putting it more in line with the Accord and Toyota Camry. There are no Passat diesels slated for American consumption, and similarly, neither Honda nor Toyota offer diesels in their American lineups. There are no wagons, either—just like the Accord and Camry. Good luck trying to pick the Accord, Camry, and Passat from a lineup. And all three start at around the same price: around $20 grand for a base four-cylinder with a manual transmission. So does this mean VW will offer lower-content cars, similar to Honda's DX and Value Edition models, possibly swaying away from "German engineering?" Obviously VW's PR wouldn't say this. But for one, building the Passat in Tennessee is far cheaper than German production. And the current Passat is only sold in two markets: here and China—a country that shares surprisingly similar tastes as us in cars. Take from that how you will. Ultimately, criticism of these decontented cars has fallen on deaf ears and blind print. Sales of the "Americanized" Passat have doubled since the current generation was introduced in 2011. The lambasted Jetta, which was criticized for its interior cheapness? VW pushed 10,962 out the door in January alone. The Costco model of buying in bulk clearly resonates with our purchasing habits. Things are looking up for Volkswagen. For one, Honda is steadily losing sales—especially after the poorly received Civic made its debut last year. Volkswagen set record profits for 2011 in Europe and fared through the 2008 financial implosion relatively unscathed. It seems to have a hit with the newer, Americanized Passat and Jetta, which is doing exactly what Harrison predicted: stealing sales from Honda, Toyota, and Chevrolet. And a case in point: Honda faced much criticism when its Civic was revised in 2001, for replacing its sophisticated racecar-inspired suspension for a cheaper one. Sales still climbed. Careers have made on hedging the bets of sales predictions, underestimating the habits of the general public, and making knee-jerk statements. 800,000 cars by 2018 is a lofty goal, but it'd be wise to give Volkswagen the benefit of the doubt. Sources: Reuters, Good Car Bad Car
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