Volkswagen of America on Tuesday posted its worst November in six years as the emission scandal pushed sales down nearly 25 percent from over a year ago.
Sales of the Chattanooga-made Passat were worse, falling 60 percent, though some of that was due to a production drop of the old version of the sedan as a refreshed model is just hitting dealer showrooms.
VW Expansion
The city’s Industrial Development Board on Tuesday agreed to a pair of contracts valued at $1.21 million related to the expansion of the Chattanooga plant’s paint shop. VW is investing $700 million to produce a new SUV starting in 2016. The two contracts will be paid with city and Hamilton County incentive money. Also, the county Industrial Development Board on Tuesday OK’ed a payment-in-lieu-of-tax agreement with Gestamp, which is building new facilities in Chattanooga to support VW’s planned SUV production and other automakers in the South. Gestamp plans to invest $180 million in Chattanooga and hire 510 more workers.
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VW sold 23,882 total vehicles last month, down 24.7 percent from November 2014, according to the German automaker. That's its worst November since 2010, when it sold 20,189 vehicles. For all of 2015 so far, sales are down 4.3 percent, according to VW.
November results reflect the impact of the recent stop-sale for all 2.0L 4-cylinder diesel vehicles as well as for the 3.0L V6, the company said in a statement. The voluntary stop-sales were issued in light of notices received by the Environmental Protection Agency and the California Air Resources Board regarding emission-cheating software the company installed.
"Volkswagen is working tirelessly on an approved remedy for the affected TDI vehicles," said Mark McNabb, chief operating officer for Volkswagen of America. "During this time we would like to thank our dealers and customers for their continued patience and loyalty."
Karl Brauer, senior director of insights at Kelley Blue Book, said VW's diesel sales of all its vehicles before the scandal were between 22 percent and 25 percent.
"Those numbers are easy to translate," he said about the November sales decline.
Brauer said that while some of the Passat drop is due to the selling down of the old model, more needs to be done to help the sedan compete with competitors such as the Toyota Camry, Honda Accord and Nissan Altima.
"It's not as competitive as it needs to be," he said. Passat November sales were just 2,759 vehicles.
The upgrades in the 2016 model are "a nice improvement," Brauer added. But, he said, when Passat assembly moves to the new VW global production platform with the next upgrade, the vehicle will stand a much better chance.
The KBB analyst didn't see employment losses in Chattanooga due to Passat sales, saying VW has to maintain what it's producing for the new sedan as well as prepare for assembly of a sport utility vehicle. VW is spending $700 million in Chattanooga to ready the plant for SUV production in late 2016.
The company said that pricing for the 2016 Passat starts at $22,440 - the same as the outgoing base model when equipped with an automatic transmission.
VW officials said Tuesday that when new content is factored into the 2016 Passat, this represents a $1,315 value enhancement over the base 2015 vehicle.
Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.