Herndon: VW committed to expanding U.S. market share

HERNDON, Va. — At Volks-wagen’s new headquarters just outside Washington, D.C., a classic 1958 Beetle in the sixth-floor lobby reminds executives that the German automaker has an icon in the American auto market and room to grow.

VW executives, who announced in July they will build a $1 billion assembly plant in Chattanooga, said the Enterprise South industrial park facility is “a critical element” to its North American strategy of expanding market share.

Mark Barnes, the company’s chief operating officer, said VW bolstered its U.S. sales by 1 percent in the first seven months of this year despite the slowing economy. VW sales of 135,966 vehicles through July in the United States represent only about 2 percent of the national market. But Volkswagen was one of the few carmakers to show any sales gains so far this year.

“I’ve never been so excited about a 1 percent increase, but I’ll take it in this market,” Mr. Barnes told a group of automotive journalists Friday at Volkswagen’s new American home office in Virginia.

U.S. auto sales slumped to a 16-year low in July as rising unemployment and gas prices discouraged sales of new cars and trucks. July’s seasonally adjusted sales rate — which shows what sales would be if they continued at the same pace for the full year — was 12.5 million vehicles, according to Autodata Corp. That’s down from 17 million as recently as 2005.

General Motors, which on Friday reported a $15.5 billion net loss in the second quarter, said its July sales fell 27 percent. Ford reported a 15 percent decline in July sales from a year ago, while Toyota had a 12 percent drop.

Officials for America’s Big Three automakers said last week they expect things to get worse before they get better. But Volkswagen officials are more hopeful about their success in the U.S.

As part of the company’s U.S strategy, VW is rolling out a handful of new vehicles. Last week, VW officials said a new minivan, the Routan, should be available in September.

A so-called “clean diesel” Jetta is scheduled to go on sale this month, Mr. Barnes said. Purchasers of the Jetta TDI are eligible for a $1,300 alternative fuel federal tax credit.

“Real-world fuel economy is in the mid- to high 40 miles per gallon range,” Mr. Barnes said.

VW is trying to change U.S. perceptions that diesel technology isn’t good for the environment or up to par in terms of automotive performance.

In addition, the automaker is launching another version of its midsize passenger car, the Passat, later this year, he said.

Bringing the Chattanooga assembly plant on line by early 2011 and boosting its presence at its American headquarters will help the automaker expand U.S. operations, he said.

The company eventually hopes to produce up to 250,000 vehicles annually at Enterprise South. It is expected to employ 2,000 workers.

In Virginia, where Volkswagen moved its U.S. headquarters from Michigan three months ago, the company has about 240 workers, company spokesman Steve Keyes said. The 185,000-square-foot home office has room for 600 employees, he said.

“A lot has happened in a short period of time,” Mr. Keyes said, citing the corporate headquarters move, the Chattanooga plant announcement and the unveiling of new products.

Moving the headquarters from the Detroit area enables VW to be closer to its buyers, many of whom are in the mid-Atlantic states, he said.

The Associated Press contributed to this report.