Volkswagen Group of America CEO targets profit on overall operations in U.S. this year

Volkswagen Group of America CEO targets profit on overall operations in U.S. this year

January 20th, 2013 by Mike Pare in Business Around the Region

Jonathan Browning

Photo by Associated Press /Times Free Press.


Job: Volkswagen Group of America CEO

Age: 53

Nationality: British

Education: Bachelor's from the University of Nottingham; master's in business administration from Duke University

Experience: Veteran of General Motors and Ford; joined VW in 2010

"We see the economy continuing to recover, but it's not a spectacular recovery. "

- Jonathan Browning, CEO, Volkswagen Group of America

Volkswagen is aiming to turn a profit this year in the United States, including the billion-dollar bet it took in Chattanooga, the company's chief in America says.

While the sales part of VW in the U.S. was in the black last year after nearly a decade of losses, the carmaker's plan is to make a profit in 2013 on overall operations including the $1 billion Chattanooga plant, said Jonathan Browning, CEO of Volkswagen Group of America.

"The long-term goal is for the entirety of the business, including the plant, to become profitable by 2013," said Browning.

The U.S. chief and Christian Klingler, Volkswagen's board member for sales and marketing globally, sat down for an interview last week at the North American International Auto Show in Detroit.

Both said they're looking for higher VW sales this year than last when the car maker set records for sales both globally and in the U.S.

VW Group of America is expected to sell more than 600,000 vehicles this year for the first time ever, officials said. The company's 2012 U.S. results bested a 42-year-old mark.

Klingler said VW officials decided four or five years ago that they wanted to return in a bigger way to the U.S. market after being a niche player for decades.

"We said this time we'll take it seriously," he told a small group of journalists at the show.

In 2011, the company opened the 2 million-square-foot assembly plant in Chattanooga, its only one in the U.S. Volkswagen began producing a new midsize sedan for American motorists, and the Passat last year blew by its old record for U.S. sales.

Potentially in the wings is a new midsize sport utility vehicle which it unfurled last week as a concept in Detroit that could be made in Chattanooga. The new vehicle is targeting Ford's Explorer, Nissan's Pathfinder and Toyota's Highlander.

"The midsize SUV, it could be an interesting proposal for us," Klingler said. He said it likely would be 2015 before it hits the market, if VW's top officials give it a green light.

Concerning Chattanooga production, Browning said the plant has a number of stages of possible expansion.

"These potentials still exist," he said.

Officials said they want an SUV made for America and assembled in North America. For VW, that also could include Mexico, where it has an assembly plant and is building another to make an Audi SUV.

Autoweek's website said after the show Chattanooga will receive the nod to build the SUV, though it didn't cite a source.

Concerning the overall vehicle market in the United States, Browning said he thinks sales will come in at about 15 million units in 2013. He said he's forecasting at the lower end of projections, however.

"We're relatively cautious," Browning said. "We see the economy continuing to recover, but it's not a spectacular recovery."

Browning said debt ceiling discussions in Washington, D.C., may hamper consumer confidence, but he added that "it's remarkable how robust the American consumer is."

At VW, he said, the company expects its sales to outpace the overall market. Still, the CEO said, growth rates for the automaker will slow after the rapid rise in sales the past few years.

"The focus in the U.S. is part of the long-term strategy set in 2008 and consistently executed," Browning said. "That's what you're seeing playing out month by month, year by year."

VW has said it wants to sell 1 million vehicles in the U.S. by 2018.