Volkswagen AG is ramping up investment in the U.S. as it aims to win over American car buyers and make its North American operations profitable again, a cornerstone of the German automaker's ambitious global expansion plan in coming years.
Volkswagen wants to "increase sales and market share in 2010," in the U.S., Volkswagen's U.S. chief Stefan Jacoby said in a presentation on Sunday, adding that the overall U.S. market volume is expected to be between 11 million and 11.5 million vehicles this year.
Jacoby said Volkswagen might return to profitability in the U.S. in 2013 and at the same time boost annual sales to between 450,000 and 400,000 vehicles.
In 2009, Volkswagen sold 213,454 vehicles in the U.S., down 4.3% from 223,128 in 2008. But its market share rose slightly, to 2.05% from 1.68% in 2008.
Jacoby said Volkswagen's incentive spending of about $2,300 per vehicle remains below the industry average of $2,800.
As part of its long-term growth targets, Volkswagen wants to more than triple annual car sales in the U.S. to 1 million a year by 2018, with the Audi premium brand accounting for 200,000 sales.
Growth in the fiercely competitive U.S. market is crucial for Volkswagen's long-term expansion plan in coming years, which includes outpacing Japanese auto behemoth Toyota Motor Corp.
Europe's biggest automaker by sales has steered better through the industry gloom than its rivals, thanks mainly to a large presence in China and a strong foothold in Brazil. Additionally, sales on its home turf were fostered by state-backed scrapping incentive schemes to trade in old gas guzzlers last year.
But Volkswagen's turnaround efforts in the U.S. proved to be an uphill battle, which led the company to increase investments further.
Volkswagen is investing $125 million on two new dealerships in New York City alone as part of its wider plan to ramp up the presence in the U.S of its core VW and the Audi nameplate. Volkswagen plans to begin selling vehicles at the new facilities in early 2010.
Additionally, Volkswagen is building a new plant in Chattanooga, Tenn., for the production of a mid-sized sedan in 2011, with initial capacity for 150,000 cars annually. It will invest up to $1 billion in the plant and create about 2,000 jobs. The Wolfsburg-based automaker closed its last U.S. plant in Westmoreland, Pa., in 1988 due to underutilization amid sluggish sales.
Jacoby said by 2013, 85% of all Volkswagen vehicles sold in U.S. will be produced in North America. Besides its new plant in Tennessee, Volkswagen operates a production plant in Mexico.
The factory in Chattanooga "will enable the turnaround of VW's U.S. operations," Jacoby said.
VW's Audi premium unit, however, last year postponed a decision on starting production in the U.S. amid a broad market downturn.
Ramping up purchasing and production in the dollar zone is crucial for Volkswagen to make its U.S. operations profitable again, as this would lower the firm's exposure to a weak dollar compared to the euro.
Currency fluctuations have been a major concern for foreign automakers who are importing many cars built abroad into the U.S.
