Though Volkswagen Group of America officials were vague, at first, about what that number meant, the goal more recently was said to encompass all the automaker’s brands sold in the U.S., which include Audi, Porsche, Bentley, and Lamborghini. Good thing. Because VW Group of America sales were 599,699 in calendar year 2014, and that was down from 611,512 in 2013, attributable to the VW brand’s decline from 385,366 in ’13 to 367,360 last year.
Bear with me as I repeat this somewhat amazing factoid: The VW brand’s best sales year in the U.S. remains 1970 when Beetle & Co. hit 569,696.
Let’s crunch a few more numbers: All of corporate VW first surpassed the brand’s ’70 milestone in 2012, when the new Tennessee-built Passat had a hot launch (remember the Darth Vader Super Bowl commercial?) and contributed to a VW Group record of 615,321 in sales. Since then, VW brand sales have dragged down the VW Group with declines every year, even as Audi, Porsche, Bentley, and Lambo keep posting increases.
In 2012 and ’13, VW proudly touted a monthly diesel take rate on the Passat of as much as 25 percent and sometimes closer to 30 percent. VW says the approximately 482,000 diesels in question sold between the 2009 and 2015 model years (which includes a statistically insignificant number of Audi A3s) accounts for about 20 percent of Volkswagen’s U.S. sales in the same period.
I’ve often said that VW’s diesel sales take rate is not a sign of its success; it’s a sign of its sales failure in the United States. Volkswagen has sold those cars to its fan base, not to people looking to trade in Hondas, Toyotas, and Nissans. This problem long precedes the diesel software scandal.
Now that the scandal has emerged, how many VW loyalists can the brand retain? If VW Group is lucky, some might migrate to Audi, where the margins are much higher anyway. But this scandal also will hurt mainstream sales, and probably more so. I’d hate to be a salesperson trying to move VW Jetta Hybrids right now (“Uh, yeah, this really is the green one”).
Migrating loyalists to Audi wouldn’t be the end of the world for VW Group. While VW is the best-selling brand in Western Europe (which is a slightly bigger market than the U.S.), and the Golf is the best-selling model, these cars are said to not make money for the VW Group. That task in Europe goes mainly to Skoda and Audi.
I suspect the scandal signals the end of VW’s already faltering sales renaissance, and the Volkswagen brand soon could be duking it out with a resurgent Mitsubishi for U.S. sales position — think of McLaren, Lotus, and Marussia fighting for non-point positions in any of this season’s Formula 1 races. A couple of decades ago, VW couldn’t decide whether to market its vehicles here as alternatives to Honda or as affordable front-wheel-drive BMWs. Now, it will need to put enough cash on the hood of its cars to compete on price against Kia and Mitsubishi.
What about sales of diesels overall?
There already has been a backlash against “clean diesel” — making it kind of like “clean coal” — in Paris and London. Mayors there want to ban diesels from their cities because of the sooty particulates that can concentrate in local skies. “Clean diesel” means the particulates have been cleaned up, specifically oxides of nitrogen (NOx), either via a particulate trap such as the one on the VW Jetta TDI wagon tested by West Virginia University researcher/engineer Daniel Carder or with a trap supplemented by a liquid urea exhaust after-treatment system that has to be refilled every 10,000 miles or so, as in the Passat TDI he also tested.
Carder used an elaborate exhaust-trapping device he attached to three vehicles while driving them in real-world situations, more than a year before the EPA issued its notice of investigation against VW.
Carder believes it could take no more than retuning of the VWs’ fuel injection to make its diesels meet EPA standards. The third diesel that Carder tested was a BMW X5, which matched its EPA test numbers in the real world.
“What happened with the BMW is what we expected,” he told me.
Particulate-cleaning systems can be as costly as a good hybrid powertrain, and mainstream buyers shopping for non-luxury models or trucks will measure the $2,000 to $3,000 premium for a diesel engine over the base gas engine against miles driven and against the price of gasoline and diesel fuel. Diesel is not an easy proposition, unless you’re an enthusiast yearning for a diesel stick-shift station wagon. There must be hundreds of us in the U.S.
Diesels put out more CO2 per gallon than gas-powered engines do but can emit less overall because they generally go many more miles on each gallon. Buy a hybrid if you drive mostly in stop-and-go situations, or buy a diesel if you spend long miles on open highways.
My bold prediction: We’ll see small, steady growth in sales of diesel-powered light-duty trucks such as the Jeep Grand Cherokee and Chevrolet Colorado/GMC Canyon. Mercedes-Benz has been selling small, steady numbers of diesels on and off for decades, and that won’t change much.
VW diesels are done in the U.S. and Canada. The brand will take a hit in Western Europe, but it will be a long fall. (Memo to VW Group: This is your chance to push Skoda and Seat sales.) And if Mitsubishi can sustain its comeback, we’ll see it nudging into VW’s U.S. sales territory by, oh, 2018 or so.