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DIESL PWR
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21 NOV 2005

Is it more MTV than Detroit? Maybe so, but VW says it’s learning invaluable lessons from its away team.

by Paul A. Eisenstein

Pulling a page from the reality television series Big Brother, 23 Volkswagen employees have shacked up near the laid-back California beach town of Malibu . But they aren't there for fun and games.

Times are tough for the German automaker's U.S. operations. Once the biggest of the import brands, Volkswagen of America's sales have slumped sharply since the beginning of the decade. And even the planned profusion of new product due to market next year isn't likely to turn things around, company officials have come to grudgingly concede.

A fundamental problem is that VW has lost touch with the distinctive tastes and needs of American motorists. So the employees camped out in California - including 22 Germans and one American - have been assigned to put their ears to the ground and come back with recommendations that could lead to a new wave of vehicles specifically designed for the huge U.S. marketplace.

Ultimately, the effort is meant to generate "a systematic change in how we view the United States ," said Adrian Hallmark, the new American boss of the VW brand.

James Bond, meet "BP"

Named after Ian Fleming's 1955 spy novel, the Moonraker Project was set in motion by Volkswagen AG Chairman Bernd Pischetsrieder, and is being closely watched by the VW brands' new global chief executive, Wolfgang Bernhard, the former COO at DaimlerChrysler's Chrysler Group.

There is no escaping the fact that VW has serious problems to overcome. The first truly successful import, the German maker has had more than its shares of ups and downs since the first Beetle hit U.S. shores 57 years ago. At its peak, in the 1960s, Americans bought over 600,000 VWs annually. But by 1993, sales tumbled to just 49,000, and the company seriously considered abandoning the U.S. market.

It ultimately decided to fight back, introducing a procession of new products, including the reborn New Beetle. Targeting young and influential consumers with its "Drivers Wanted" ad campaign, Volkswagen staged an unprecedented comeback. In 2001, sales shot to 356,000, and the half-million mark seemed well within reach.

But things haven't gone quite as planned, VW once again losing its momentum. Sales slipped to 257,000 last year, the U.S. operation rolling up nearly $1.3 billion in losses. This year, the consulting firm, AutoPacific, Inc, predicts sales will dip to just 209,000.

What happened? Product delays and significant quality problems soured owners, sending the automaker tumbling in influential polls, such as J.D. Power's Customer Satisfaction Index. The studies suggest that Volkswagen has lost touch with its buyers.

"It's often hard for them to internalize what is needed here," said Jim Hossack, an analyst with AutoPacific. "Until you've driven across the desert of the southern U.S. on a 100-degree day, it's difficult to understand why you need cupholders and particularly powerful air conditioning."

So members of the Moonraker Project have been spending time driving across the desert, as well as struggling through snowstorms, and hanging out with surfers along the California coast.

"I didn't discover the real urgency of the situation until we experienced the market firsthand once we got here and talked to Volkswagen dealers," Arne Harms, of VW's quality assurance department, wrote in Autogramm, an internal VW publication, "We are trying to sell products developed for the European market on the American market."

The Moonraker Project is set to wrap up at the end of this year, though in an interview shortly after joining VWoA, Hallmark suggested the automaker might keep it running, at least in some form, as a way to keep its fingers on the American automotive pulse. Volkswagen already operates an advanced design studio in the Los Angeles suburb of Simi Valley to stay tuned to styling trends.

Even with Moonraker's help, Hallmark cautioned that a VW turnaround "won't happen in a year." It will take months to simply digest the results, and several more years before the findings can be translated into new products geared for the U.S. market. But any change would be noteworthy. For decades, the automaker refused to even tweak its powertrains to reflect different American driving conditions.

Volkswagen did hint at what might come during Aftermarket Week, the annual convention of the Specialty Equipment Marketers Association. Though VW products are popular with the so-called "tuner" crowd, this was, notably, the first time the automaker attended the Las Vegas event.

The VW booth was crowded with wheels, tires, and other parts and accessories, but center stage was reserved for three high-performance prototypes, including the 535-horsepower Passat R-GT. With a top speed of 190 mph, one VW official described the show car as a potential "M5 killer," a reference to BMW's top performance model.

There are no specific plans to put the R-GT or any of the other concept vehicles into production. But if that's what U.S. consumers want, Hallmark hinted, Moonraker should help them get it.

source: The Car Connection

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I'm just glad Volkswagen, after years of us enthusiast complaining on the internet, has finally realized that it can't simply stick US plates on European products and expect Americans to like them. Do you see Ford selling its US products in Europe? No.

They're off to a good start, offering the more ample 3.6l V6 on the Passat instead of the 3.2l V6 the European Passat has. The "old" Volkswagen would have offered the 3.2l model (and still charged $30k-$40k) and instead of having a best-of-class V6 Volkswagen could brag about, the Passat would simply be middle-of-the-road (again).

Say what you will about their recent SEMA models, but the fact that they a) worked with one of the premier VW/Audi tuners, HPA Motorsports, to make these models, and b) that they actually entered SEMA, shows that they're finally waking up to what the US consumers want. Volkswagen can't expect to tell enthusiasts that they're not allowed to tune their cars (or risk voiding the warranty) if they're not going to provide an attractive in-house alternative, and its about time they've relized this.

Well, I'm excited.
 

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a.k.a. porkchopzz4
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890 Posts
kcfoxie said:
Interesting read. I suppose Jetta V marks the start of the Americanized market vehicles?
I thought they meant the Jetta V is what has caused them to rethink the vehicles they bring to the U.S. ;)
 

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Porkchop said:
I thought they meant the Jetta V is what has caused them to rethink the vehicles they bring to the U.S. ;)
something like that. the jetta v definetly had a lot of r&d put into it. we love ours :D
 

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Registered
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you know, i really have to laugh that people who probably have 3 degrees in marketing and business can't figure out why VW's don't sell that well... hmmm... you sold 600,000 units a year back when they were dirt cheap and fun, and now you wonder why the $20K corolla wannabe isn't selling like you hoped? Bring over the Polo GTI, bring back the kind of styling that made VWs appealing to begin with. bring back the light, fast, cheap philosophy.
 

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I bleed Burnt Orange!
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687 Posts
After reading this article, what I don't understand is why VW is having to go through this, when Porsche went through this a few years ago.

They did a very similar thing, in that they sent engineers to Arizona for a summer to understand why US buyers complained about the AC and the lack of cupholders.

After 1 month in 120 degree days, they immediately set about redesigning the AC system.

Don't the Porsche engineers talk with the VW engineers? Aren't they part of the same company?
 

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Light fast and cheap. Light and cheap I recall my father and grandfather saying their beetles were, fast was never a word used to describe them ;)
 

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The NC Cat
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dgoldbe2 said:
Don't the Porsche engineers talk with the VW engineers? Aren't they part of the same company?
I do not think so. There is collaboration and some crossbreading (Porsche Cayenne / Volkswagen Touareg), but they are still two distnct companies. In september Porsche begun a move to purchase 20% of Volkswagen, but it did not happen.

Aside of this I agree with Scarab, the cars are too expensive and have too many quality issues.
They are fun to drive, but that is not enough to drive sales.
I honestly think the NB is way overpriced, don't get me worng I would buy it again, but I love it, and so I am biased. The average consumer who purchase with brain (instead than heart like me:)) will not buy a VW, Hondas are way cheaper and more relaiable.
 

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neko said:
I do not think so. There is collaboration and some crossbreading (Porsche Cayenne / Volkswagen Touareg), but they are still two distnct companies. In september Porsche begun a move to purchase 20% of Volkswagen, but it did not happen.

Aside of this I agree with Scarab, the cars are too expensive and have too many quality issues.
They are fun to drive, but that is not enough to drive sales.
I honestly think the NB is way overpriced, don't get me worng I would buy it again, but I love it, and so I am biased. The average consumer who purchase with brain (instead than heart like me:)) will not buy a VW, Hondas are way cheaper and more relaiable.
I agree.My bug will never last as long as my CRX
 

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Premium Member
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I'll agree that the dealers suck. I don't think VW has a market for the trucks, heck Honda is just now making one. VW made one in the 80s and it didn't sell too well, and it was just as capable as the other little pickups out there from Ford, Nissan, Isuzu, Toyota, etc.
 

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180 Degrees out of faze
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841 Posts
The sad thing is that VW makes a couple of very nice pickup trucks. They just do not bother to import them. They have a mini pickup about the size of the Chevy S-10 ( South America market), and the big one about the size of a Ford F-150.
Hey, just bring that big pickup with the V6 TDI motor over here!
 
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