Volkswagen sales sag as Chrysler soars

Volkswagen sales sag as Chrysler soars

September 4th, 2014 by Mike Pare in Local Regional News

VW Passat

Photo by Associated Press/Times Free Press.

A new Chrysler commercial for its Dodge Charger R/T takes the Volkswagen Passat to task while poking a little fun at the Chattanooga-made midsize sedan.

On a dark city street, a metallic silver car is ready to roar ahead when a narrator says "Here it is. The 470- horsepower, Hemi V-8, butt-kicking, Motley Crue-blasting Volkswagen Passat. No, just kidding. It's a Charger."

Chrysler and VW are foreign-owned auto companies whose U.S. sales are going in different directions as evidenced by August's numbers. Chrysler Group, a unit of Italy's Fiat SpA, on Wednesday showed a 20 percent gain in August over a year ago while German-owned VW Group sales fell 2 percent.

Sales at the flagship Volkswagen brand were down 12.8 percent in the month, offsetting gains by the VW Group's Audi and Porsche luxury models.

Sales of Chrysler's Jeep brand, including its fleet of sport utility vehicles, rose 49 percent in August over a year ago. VW's aging SUV lines, the Tiguan and Touareg, reported declines of 27 percent and 2.7 percent, respectively.

Analysts and VW officials said the planned new midsize SUV the Chattanooga plant is slated to start assembling in late 2016 will be a key addition to the automaker's lineup.

Jesse Toprak, chief analyst for Cars.com, said a lack of SUV product for the VW brand is "a major competitive disadvantage."

He said the fastest-growing segment in the U.S. is compact SUVs, and the midsize units have done well, too. Toprak said VW's offerings are often priced higher than the competition and "behind the times."

VW's Passat is due for a tweak in the 2015 model year, which should bolster sales. Still, the Passat sits in the most competitive automotive segment as its battles an array of solid offerings, including the market-leading Toyota Camry.

Karl Brauer, Kelley Blue Book's senior analyst, said Chrysler's strongest segments last month were its SUV and Ram truck segments. But, he said, even models that have struggled in recent years, such as its Dart compact car and Town & Country minivan, had higher sales figures.

"If Chrysler continues to build success outside the Jeep and Ram brands, the automaker's four-plus-year string of sales growth could continue for years," Brauer said. "Chrysler's positioning within the larger new-car market allowed it to post its best August sales in 12 years."

Charger sales grew 10 percent in August. Passat fell by nearly 10 percent.

For the first eight months, Chrysler Group's U.S. sales are 14 percent higher while VW Group is off 5 percent. The VW brand itself is down 13.4 percent.

VW is trying to find its footing again in the U.S. market. After a successful launch of the Passat in 2011 and sales gains among much of its vehicle lineup, the carmaker's fortunes have turned in the past year or so.

Michael Horn, Volkswagen of America's chief executive, said in Chattanooga at the announcement of the SUV in July that the new vehicle will be "a real U.S. midsize SUV developed for the American market built by American people."

"American dealers want this car. They want to grow. They want to be profitable," he said. "That's how we add to this success story ... of the Passat and the Jetta."

Also, VW is setting up a new planning and research and design center in Chattanooga to focus on learning more about what American motorists want and developing products for them.

"It's meant to get more competence in the U.S.," Horn said.

Meanwhile, while the VW brand struggles, the Volkswagen Group's upscale Audi models had their best August ever in the U.S. The luxury brand sold 17,101 vehicles, up 22.1 percent over a year ago. Audi's sales are up 14.5 percent through the first eight months of the year.

Overall, U.S. August auto sales surpassed expectations in August with ample inventory and attractive incentives.

Kelley Blue Book termed August sales the strongest month since July 2006. It expects to see U.S. sales hit, if not surpass, its current forecast of 16.3 million units for the year.

Trey Smith of Chattanooga said he recently saved up enough money and bought a new Cadillac STS.

"The economy hasn't been bad to me," he said.

Cody Cranmore, also of Chattanooga, said he's saving up for a "project car" to fix up himself.

"If prices go up, hopefully pay will go up," he said.

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