Car market zooming but VW sales dip despite record set by its SUV

Car market zooming but VW sales dip despite record set by its SUV

May 4th, 2016 by Mike Pare in Business Around the Region

Staff photo by Mike Pare / Volkswagen's expansion at its Chattanooga assembly plant is ongoing as workers put up steel in an area behind the factory's entrance. A new midsize SUV is slated for production late this year or early next.

Photo by Contributed Photo /Times Free Press.

Gregg Clark said Tuesday his family recently purchased a Jeep Patriot sport utility vehicle because his wife liked the way it drives.

But, Volkswagen isn't on the list of models he'd consider buying as the diesel emission scandal would be a stopper, said the Franklin, N.C., man outside the Tennessee Aquarium.

Contributed photo / The Tiguan GTE Active Concept, unveiled at the North American International Auto Show in Detroit last week, is based off of the second-generation Tiguan SUV and has a plug-in hybrid drive system.

Contributed photo / The Tiguan GTE Active Concept,...

Photo by Contributed Photo /Times Free Press.

Volkswagen of America on Tuesday reported April sales fell 9.6 percent from the same period a year ago. Still, the sales drop was the lowest since December as VW's small Tiguan SUV set a record for the month, according to the German automaker with an assembly plant in Chattanooga.

Trucks and SUVs helped push most automakers to healthy U.S. sales gains last month as Honda and Nissan reported best-ever April sales. Ford posted record SUV sales, while Toyota broke a record for SUV and truck sales.

Analysts expect U.S. sales of new cars and trucks to be up 4 percent over last April when companies are done reporting figures. Car-buying site Edmunds.com predicted April sales of more than 1.51 million, beating the previous record for the month set in 2005.

Jesse Toprak, chief executive of auto research website CarHub.com, said VW needs new products such as the midsize SUV the Tennessee factory will start assembling late this year or in early 2017.

"In the U.S., the fastest-growing category is small SUVs. Midsize and big SUVs are doing well," he said. "Regardless of the diesel fiasco, VW has to have more variety."

VW posted sales of 27,112 units in the month, with the Chattanooga-made Passat sedan falling 15 percent over April 2015 to 5,629 vehicles.

Tiguan produced the best April results on record for the SUV with 3,519 vehicles delivered, a 53 percent increase over March 2015, according to the company.

VW's plant in Chattanooga is undergoing a $900 million expansion, including $600 million spent locally, to make room for the new midsize SUV.

"We are pleased with the performance in our retail business, driven by vehicles like the Tiguan, GTI and Golf R," said Mark McNabb, chief operating officer of Volkswagen of America, in a statement. "While overall sales reflect a decline, this is due in large part to an intentional decrease in fleet sales."

Toprak said VW also needs to rebuild trust among consumers amid the diesel scandal in which the company admitted it installed computer software in some vehicles to fool government emission tests.

"VW is actively trying to regain trust, but it does take time," he said.

Honda led major automakers with a 14.4 percent sales increase as both its cars and SUVs sold well, while Nissan's sales rose 12.8 percent.

Fiat Chrysler was up 6 percent on record Jeep sales, and Ford rode an April record for SUV sales to a 4 percent increase. Toyota sales rose 3.8 percent largely because of the RAV4 small SUV, which broke a monthly record with sales up nearly 32 percent.

General Motors, VW and Hyundai were the only major automakers to report sales declines. GM blamed its 3.5 percent drop on a strategy of cutting low-profit sales to rental car companies. Hyundai sales were off 8.5 percent from a record April last year.

Ford Motor Co. said it sold more than 65,000 SUVs, the best April in company history, led by the Explorer with a 22 percent increase. Fiat Chrysler was led by a 17 percent increase in sales of Jeep SUVs. It was FCA US LLC's best April since 2005.

The Associated Press contributed to this story.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.


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