Demand for Volkswagen's diesel Passat outpaces supply

Demand for Volkswagen's diesel Passat outpaces supply

December 14th, 2011 by Mike Pare in Business Around the Region

A Volkswagen Passat chassis gets a robotic inspection at the Chattanooga manufacturing plant Thursday.

Photo by John Rawlston/Times Free Press.

Wayne Dickey ordered a diesel-powered Passat SEL in early September and was told it would take six weeks to arrive.

But as Christmas approaches, the Foley, Ala., man still doesn't have his car, and now his dealer said it will be January.

"They need to actually sell cars to make a profit, don't they?" he asked.

Dickey and other buyers like him are caught in a classic case of supply and demand, officials said.

The Passat TDI, which is made at Volkswagen's Chattanooga assembly plant, is selling at double the anticipated rate, said Carsten Krebs, VW Group of America's corporate communications director.

He said the plant is trying to crank up production.

"At present, consumer demand for the Passat is outpacing our ability to produce the vehicle," Krebs said. "We are working closely with our suppliers and our manufacturing teams to increase capacity as quickly as we can."

According to VW, the plant is producing Passats at a rate of 450 or more cars daily.

Ron Kwiatkowski, new vehicle sales manager at Village Volkswagen in Chattanooga, said if a buyer walks into the dealership and orders a top-of-the-line Passat TDI SEL, it could take three or four months to receive.

"It's hot as a pistol," Kwiatkowski said. "Diesel is hot as can be whether Jetta or Passat."

He said, for example, that a customer who ordered a Passat TDI in August just received it.

Jonathan Browning, VW Group of America's chief executive, said earlier this month in Chattanooga that Passat sold 6,000 units in November and the company is pleased with its sales momentum.

"It's ahead of our plan," Browning said. "The TDI is extremely well received. Clearly, there's strong demand there that we'll be looking to respond to."

VW officials said they have set a target that 30 percent of all Passats sold in the U.S. will run with diesel engines.

Ivan Drury, an Edmunds.com analyst, said that with fuel prices at historically high levels, people are paying more attention to diesel cars despite the higher price of diesel over regular gas in the United States.

The Passat TDI (turbocharged direct injection) is rated by the U.S. government at garnering 31 mpg in the city and 43 mpg on the highway. That's compared to 21 city and 32 highway for most of the gasoline-powered Passats.

Diesels also are priced higher than Passats with gas power plants.

The Passat TDI SEL has a manufacturers suggested retail price of $32,195, according to VW. A gas-powered SEL with a 2.5-liter engine goes for $28,395.