On the Horn: VW's CEO on the Company's Golf-Flavored Future

Jim Motavalli

Jim Motavalli | Nov 16, 2014

Michael Horn, the president and CEO of  Volkswagen of America, was interviewed in New York on the day his Golf family won the “Car of the Year” award from Motor Trend. He was understandably buoyant. “We won for innovation, for design, fuel economy and value,” he said. “The Golf embodies how we will be doing cars in the U.S. There’s the TDI diesel, with a $3,000 price reduction and up to 45 mpg on the highway, the GTI, now with more torque and horsepower, and also our new e-Golf electric car. You can pick the Golf that's right for you.”

 Michael Horn: "The American consumer is embracing larger cars." (Jim Motavalli photo)More about the e-Golf in a minute. The bottom line is that VW badly needs its new family of cars to be a hit in the U.S., which remains a sore spot for this global automaker (second only to Volkswagen in worldwide sales).
VW wants to be selling 800,000 cars a year in the  U.S. by 2018, almost exactly double where it was in 2013. But Horn points to some upbeat numbers for October—30,313 sales, up 7.8 percent from the same month last year. Golf sales are up more than 100 percent (par for the course for a new model), but Jetta is also up almost 25 percent.

Volkswagen's 2015 Golf family. (VW photo) Enough numbers. Here’s some of what Horn had to say:
The world loves SUVs. It’s not just Americans. Horn points out that even in Europe, where gas is hugely expensive, people “like to sit up high.” China, he said, “used to be a sedan market, but now it’s developing into a SUV market.” We can argue about whether this makes any sense—and I do all the time—but SUV love remains real. And that’s why VW is choosing to add a SUV, not a sedan, to its U.S. production line in Chattanooga.
“The light duty truck segment, including SUVs, is up 9.7 percent, and compact SUVs up 18 percent,” Horn said. “Meanwhile the sedan market is only up 1.6 percent. That’s a telling indication. Clearly, we at Volkswagen love green cars, and we love e-Golf, but it appears that the American consumer is embracing larger cars.” In Europe, he said, SUVs are trendy, help in getting around on bad roads and “make people feel safer.”

 The Golf family is the Motor Trend Car of the Year. And that's the award. (Jim Motavalli photo)We’re on a buying spree. Partly propelled by $3 a gallon gasoline (the same force pushing SUVs), consumers are heading into dealerships. “The good news about the U.S, is that the car market is strong and next year will be better,” Horn said. He predicted U.S. sales above 16 million in 2014.
VW is being cautious about the e-Golf, which has a range of 83 miles. Horn said the new electric car “will make its way in the segment. I think it will be successful.” He doesn’t want to predict production or sales numbers. The e-Golf goes on sale this month in California (and the states that follow its emission rules), and starts at $35,445 before federal tax credits. Thirty-minute, fast-charging is standard. “It’s already very successful in Norway,” Horn said.

 Nostalgia for this old guy could sell a lot of Microbuses to baby boomers. (Jim Motavalli photo)A new Microbus? Maybe, but don’t hold your breath. VW has a strategy and its sticking to it. That includes, for the near term, compact cars and SUVs, and midsized cars and SUVs. Beyond that, after 2020, are some possible niches, which just might include a retro Microbus built on one of several existing platforms. “Our core strategy is to be successful with our core models,” Horn said. “But we have a new R&D center in Chattanooga, and we are interested in what can be done for niche markets. The Microbus remains under discussion. After all, our brand was built on two models, the Beetle and the Microbus, in the 1950s. But this debate is not priority number one for us, and it’s not a high-volume game.”
A basic problem for the Microbus is its classic rear-engine layout. Can VW build a front-engine version that would still, as Horn puts it, “look cool enough”? I say yes, but my views on this particular issue are well known. Here are "Five Reasons Why VW Should Bring Back the Microbus."

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