Is chasing volume a winning strategy?

[cawimmer430]

Hate to break it to you, Wims, but the Yaris isn't all that popular.

That's great news. 

[sportyaccordy]

This is the answer to the question posed in the thread title. Earning profits is a winning strategy. Chasing volume is but a way of going about that.

If they make $5k on every CC and only $1k on every new Passat it is worth it if they sell six times as many Passats as CCs. Same with the Mk V Jetta vs. the Mk VI: sure, they might earn less on each sale, but if they sell several times more of them they'll make more money in the end.

The only thing that might get them in trouble is if they cheapen out on the product to the point it's so bad people won't want to buy one regardless of price (what happened to GM, Ford, Chrysler, etc.). I don't think that will happen because quite frankly their old products don't have a good reputation for reliability in North America anyway.

I just don't see this becoming a reality. Even before the economy tanked cars were losing ground to trucks year after year. The popular cars saw steady growth while worthwhile upstarts like the Elantra & Focus saw explosive growth. Likewise the Jetta saw immense growth with its old strategy. Now the playing field is 4x tougher, AND sales are down. Where is the volume for the lackluster Jetta going to come from? Car sales are perpetually down, and nearly all its competitors are better choices. IDK I just see this as a mega fail. Esp w/their uncompetitive engines. I just can't think of a reason to buy a new Jetta.

Skoda would be a far better choice. Seats are "quirky" and you know how Americans feel about quirky cars (French cars failed in the US apparently also because of quirky design and interior design). Boring stuff from Toyota, Hyundai etc. will sell over exciting cars from Seat, Citroen, Peugeot, Renault etc.

Then again Skoda might fail in the US since nobody there wants a car built by "Communists". 

The French failed in the US because their cars were even less reliable here than the crap unloaded on us by Detroit, which was compounded by the fact that their dealer networks were weak and they apparently had never heard of rust. Volvo, Saab, Subaru up till recently all have long storied histories in the US because their owners could rest assured their cars would start the next morning and get them where they needed to go w/o fuss. Renault? Peugeot? Fiat? Not so much

[cawimmer430]

The French failed in the US because their cars were even less reliable here than the crap unloaded on us by Detroit, which was compounded by the fact that their dealer networks were weak and they apparently had never heard of rust. Volvo, Saab, Subaru up till recently all have long storied histories in the US because their owners could rest assured their cars would start the next morning and get them where they needed to go w/o fuss. Renault? Peugeot? Fiat? Not so much

There's a good article on this in this months Autobild Classic. French cars of the time were some of the most advanced and innovative in Europe. They were also complex and the dealerships in the US were incapable of properly maintaining or fixing them. The mechanics were poorly trained or simply not familiar with the advanced technology found in these cars. Cars like the Citroen SM or DS also had key components in hard-to-reach-areas which made maintaining them somewhat difficult and time-consuming - and that led to a reputation of unreliability. Well the SM was a bit problematic in some regards but cars like the DS were known for their solidity in Europe. Drive it often enough and the hyrdopneumatic suspension won't fail. Leaving the car parked for two weeks or more can cause suspension failure. It was the same case with the Mercedes 450SEL 6.9.

I think it was the stuff made by AMC-Renault "Alliance" that gave French cars a bad reputation in the US.

[sportyaccordy]

IDK man....

French cars in the US were cars like the Peugeot 405 and the Renault LeCar, which as a kid in kindergarten I remember as looking like a cheap toy (the 3 lug wheels sealed the deal). There was nothing complex about a LeCar, it was just crap.

[93JC]

I just don't see this becoming a reality. Even before the economy tanked cars were losing ground to trucks year after year. The popular cars saw steady growth while worthwhile upstarts like the Elantra & Focus saw explosive growth. Likewise the Jetta saw immense growth with its old strategy. Now the playing field is 4x tougher, AND sales are down. Where is the volume for the lackluster Jetta going to come from? Car sales are perpetually down, and nearly all its competitors are better choices. IDK I just see this as a mega fail. Esp w/their uncompetitive engines. I just can't think of a reason to buy a new Jetta.

Nearly all the Corolla's competitors are better choices but Toyota still sells tons of the damned things.

What's so bad about the Jetta? By all accounts it's not 'bad', just... middling. It doesn't stand out in performance, it doesn't stand out in fuel economy, but it still has a fairly nice interior and I think it looks quite good in a conservative way. Same with the new Passat. It's got a big back seat, it looks fairly nice...

The $16,000 price tag of the Jetta will draw many people in.

[GoCougs]

I mean, if they went from making 5k on every CC sold to 1K on every Passat Kamry and even manage to quadruple their market share, would it be worth it? Like I said in the first post, these companies are businesses first, so I'm hoping their not going Napoleon and sacrificing overall profit for volume. I'd rather be Porsche or Ferrari than GM... market share means shit w/o a focus on profitability + peace of mind. Liability alone makes me weary of chasing volume in today's litigious times

The first key to success in selling commodities is market share/volume - profitability comes second.

[AltinD]

Yeah, that's really terrible.

That was the crap engine. The B5.5 Passat was ALSO available with the 102 HP 1.6L, the 130 HP 2.0L (20v), the 150 HP 2.0 FSI, the 170 HP V5, the 160 -180 HP 1.8T, the 193 HP 2.8L V6 and the 285 HP 4.0 W8 (only the V6 and later the W8 were available in Dubai) ... and these were only the petrol engine options, there were many diesel options (1.9 TDi in 100 and 130 HP & 2.5 V6 TDi in 150 HP) as well. And then was the availability of 4Motion AWD with many of the engine options and of course the choice of body style of the sedan or wagon.

All but the 1.6 petrol and the 100 HP 1.9 TDi were faster, and all but the V5, V6 and W8 petrol models had a better fuel economy. Even so, still the 2.sl0w engine on the Passat, with the 4sp A/T, according to the manufacturer's brochure for the wagon, had a combined fuel economy of 24 MPG (10L/100 km), 15% better with the 5-sp Manual. Surely for the sedan it was rated better. 

How many drive-trains were available on the Camcords? ONLY 2 for each!!!! 

[sportyaccordy]

Nearly all the Corolla's competitors are better choices but Toyota still sells tons of the damned things.

What's so bad about the Jetta? By all accounts it's not 'bad', just... middling. It doesn't stand out in performance, it doesn't stand out in fuel economy, but it still has a fairly nice interior and I think it looks quite good in a conservative way. Same with the new Passat. It's got a big back seat, it looks fairly nice...

The $16,000 price tag of the Jetta will draw many people in.

The Corolla is definitely mediocre, but it has enough brand equity to continue moving tons of them w/o being competitive. The Jetta doesn't have that luxury.

And the Jetta isn't "bad" per se, but it's not particularly good at anything specific, and it's not that great of a value. I mean for that 16K, most of the Jetta's competitor's offer close to as much interior room, better engines, and A/C standard. I don't htink one Jetta will be sold at that 16K price point. The new Passat is alright, but it's just alright. Again no reason for a CamCord buyer to convert, nor for a value seeker to pass up a Sonata or Fusion. All the Jetta/Passat's non Honda/Toyota competitors are bringing something to the table to lure people away... I just don't see what VW is bringing to the table with this crop.

How many drive-trains were available on the Camcords? ONLY 2 for each!!!! 

Yet the Camry still sold way more just in the US than the PAssat did around the world...

No sense in offering 100 powertrains when 2 will do. And if not for the goofy displacement & fuel taxes around the world I'm sure VW would consolidate its engine lineup in the Passat to the 1 or 2 gas engines and 1 diesel like it does here.

I mean of all the engines you listed the only one truly worth a damn was the 180HP. All the rest are either borne out of high displacement taxes or are grossly inefficient/unnecessary

[ifcar]

With the Passat, there's a potential for attracting the roomy/soft/quiet crowd that Hyundai won with the previous Sonata and has since moved away from.

The Jetta, I honestly never thought much of in the last generation either, either for driving dynamics or interior quality, so it's for me more of the same with slightly stronger sales.

[cawimmer430]

IDK man....

French cars in the US were cars like the Peugeot 405 and the Renault LeCar, which as a kid in kindergarten I remember as looking like a cheap toy (the 3 lug wheels sealed the deal). There was nothing complex about a LeCar, it was just crap.

I think the Renault-AMC stuff was garbage. At the time the French car industry was suffering from problems and most late 1970s and 1980s French cars weren't perfect. And I think rust was a big issue to, but then again all cars of that era were plagued by rust.

[Tave]

Like 2o6 said, VW's sales took off when it stopped chasing volume and went upmarket.

I disagree. This March was the strongest Jetta sales month in history. VW's golden year of sales was 1970 when they sold a half million Beetles, the ultimate mass-consumer-mobile. Their subsequent decline in the US was the result of VW making inferior crap. The swing in sales during the upmarket phase happened when VW stopped making the crap.

What I'm trying to say is you can chase volume without aiming at the bottom of the pack in terms of quality.

[Madman]

I just think it's ridiculous how much Volkswagen has to forfeit in order to hit that low price point. The car's built in Mexico FFS. It's not built from unobtanium nor is it  built by German artisans.

I've wondered about this myself.  You'd think cheap Mexican labour would make the Jetta more than price-competitive without having to resort to the sort of shameful cheapening and de-contenting the current Jetta has been subjected to.  Just how big is the profit margin on a Jetta these days?  It must be ENORMOUS!!!

[Madman]

IDK man....

French cars in the US were cars like the Peugeot 405 and the Renault LeCar, which as a kid in kindergarten I remember as looking like a cheap toy (the 3 lug wheels sealed the deal). There was nothing complex about a LeCar, it was just crap.

Three-lug wheels make a car look cheap?  Err......okay.

BTW, the Peugeot 405 didn't have three-lug wheels.  Having owned a 1990 Peugeot 405 for six years (and have driven a LeCar), I think I can speak with some authority on this subject.

The Peugeot 405 was launched at a time when Peugeot Motors of America was already on the ropes.  PMA was starved of new product throughout the 1980s and was effectively a one-model (the 505) company.  The 405 could have heralded a much-needed rebirth for the brand, except for one critical problem; price.  The 405 landed on American shores with a BMW 3 Series-sized price tag.  This was a car that should have been targeted straight at the Camry and Accord.  Interestingly enough, after Peugeot announced it was pulling out of America (and slapped a then record-setting $6,000 rebate on the car), 405s started selling in record numbers.  This happened despite buyer's certain knowledge they were latching themselves to automotive orphans.  This last-minute success was proof there was nothing wrong with the 405 that a big price cut couldn't fix.

I think it was the stuff made by AMC-Renault "Alliance" that gave French cars a bad reputation in the US.

Bingo.  It was AMC that flushed Renault's reputation down the tubes in America.  Ironically, the French-built Renaults were fairly decent cars for their time.  But these cars were overshadowed by the Alliance and Encore (Americanised 9 and 11) which were slapped together by the same people who brought you such quality products as the Gremlin and Pacer.

[sportyaccordy]

The LeCar had 3 lug wheels



I know at the minimum Peugeot made decent cars because they are somewhat popular in Ghana, where durability is paramount. During my first trip to Ghana we took a long road trip in a 505 wagon, which was driven by a cab driver, and it ran fine.

And of course they suffered blows from having to import, having to cater to the generally lower priced "one size fits all" American market, and having a very weak dealership network in a very sparse country. The AMC collabo didn't help. But for the most part the cars we got from France were crap.

[93JC]

You can't pin Renault's failure in North America on AMC. It didn't matter where they came from, whether it was an Encore from Kenosha or a Fuego from Baillancourt: they were all poorly built. Even the 9 & 11 were known in Europe for poor build quality.

[AltinD]

News from VW Group Middle East: Phaeton, Passat, Polo out ... AUDI A1 in

[AutobahnSHO]

I drove one of them AMC/Renault cars:
Eagle Premier

Wife wanted an automatic, dude wanted to sell it for $2000. In Germany.

Rode bad because the shocks were worn, that thing was FUNKY. If it hadn't bothered me with electrical gremlins (nothing I should have scrapped it for,) and had just bought my SHO, I wouldn't have scrapped it.