Horn: Volkswagen needs two new SUVs in the U.S. market

photo Michael Horn, incoming President and CEO of Volkswagen of America, speaks at the North American International Auto Show in Detroit, Mich.

Newly named Volkswagen of America chief Michael Horn said the automaker needs not just a seven-seat sport utility vehicle, which the Chattanooga assembly plant is the leading contender to build, but a new compact SUV as well.

Horn, the 51-year-old German who took the reins of VW's U.S. sales and marketing arm earlier this month, also said in an interview that officials at the company's headquarters in Wolfsburg need to better understand the American car buyer.

The 23-year VW veteran comes to his post in Herndon, Va., after serving as global head of aftersales for VW since 2009, one of a number of positions he has held within the company both in Europe and internationally learning sales and marketing. When he was in his 20s, Horn said he spent time at the University of San Francisco, where he earned a business degree.

The married father of two said he has always closely followed the U.S. auto market, and he understands the inner workings of VW, which should help "how you translate the American market to [VW's German headquarters in] Wolfsburg in the right way and to push it."

Last week, he sat down with Times Free Press Deputy Business Editor Mike Pare and a handful of other journalists at the North American International Auto Show in Detroit.

Here is an edited version of his remarks.

Q. What's the biggest hole you see in the lineup [for Volkswagen]?

A. I'd like to see a compact SUV built in North America. We have the Tiguan [that's built in Europe.] If you look at the segment, it's more than 2 million cars and growing in the U.S. Customers want these cars - three rows, the Tiguan is two rows and has a small trunk compartment.

If we want to be where we aim to be, we need more models covering huge segments. People want the size and the flexibility.

Q. Does it make sense to produce a compact SUV and a midsize SUV at the same place?

A. If you have only one product [at an assembly plant,] it's difficult in the long run. Products have cycles.

If you want to run a factory in the right way, you need more than one model. But there's no decision yet. It will be done in due course. The midsize SUV, I'm very happy. It's a very important message to the media and more to the dealers, who are investing. The next step is to discuss the compact SUV and to push this.

Q. Talk about the Golf. They haven't really sold. How much is growth in the U.S. predicated on the Golf?

A. A little bit. It can't be a lot. We sell 45,000 to 55,000 a year?

There are four huge segments in which you have to be in to be in the game - compact sedan, midsize sedan and the two SUVs. That's 80 percent of the market.

Q. And the pickup segment here is big, too. Are you looking at it, too?

A. Not very much. We have a pickup, called the Amarok, but it's too small. If you put it next to an F-150, you'd think you could put it in the trunk, in the back.

Q. Getting 1 million sales by 2018, does that seem doable?

A. If we get the product, yes. To get economies of scale, to get the engines, to get the drivetrains to be produced here, that's when you get away from the dollar-euro exchange rate here.

Long term, we have to go beyond this [1 million vehicle sales goal by VW and Audi] - 2018 was developed in 2008. It's a great strategy and most has been achieved. But, we have to push more on the pedal, not here but very much in terms of Wolfsburg.

Q. You mentioned about stepping on the gas, not here but in Wolfsburg. What does Wolfsburg need to do more of to be successful?

A. To listen to the market, to the demands of the customers, to the competitive situation, which is also reflected in product content. [You have] to understand this game here, to embrace this game.

Q. The Phaeton - is it something that should come back to the U.S.?

A. The luxury segment is cutthroat. You need one, two, maybe three generations. It takes time.

I personally believe it will come back to the U.S. It's clearly planned and it will have all the features and will be an icon in terms of technology and luxury for the brand. Whether we sell it at every dealer, that's a totally different story. It's not a volume car.

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