While turning VW into a BMW competitor might seem like the equivalent of teaching a penguin to fly, VW Group's new CEO, Bernd Pischetsrieder is left selling what many analysts consider the impossible.
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| Volkswagen sits at a rather pathetic 33 out of 37 automakers in the J.D. Power 2003 Vehicle Dependability Study. (Photo: Shawn Pisio, Canadian Auto Press) |
All the while important research and development money has been siphoned from the development of the brand's core volume products, and improving its lackluster reliability ratings.
How lackluster is it? According to respected J. D. Powers and Associates, Volkswagen sits at position 33 out of 37 automakers in their 2003 Vehicle Dependability Study (VDS), only beating Suzuki, Daewoo (that doesn't even exist in North America anymore), Land Rover and Kia.
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| The Golf V hasn't caught on nearly as well as expected in its home market since its August 2003 introduction. (Photo: Volkswagen Canada) |
To make matters worse, the brand's most important new product has stumbled during takeoff. The fifth generation Golf hasn't caught on as well as expected in its home market since its August 2003 introduction, reportedly due to styling that looks too similar to but not quite as sporty as its predecessor, a high price compared to its competitors, and quality glitches. Normally the introduction of a new high-volume core product would increase sales, since August sales have only rebounded by 0.2 percent in 2003, to $112 billion. Analysts expect 2004 will improve VW's popularity, with others stating that 2005 is a more likely comeback year.
Exacerbating the current problem, fears that the Golf V will continue to under-perform on the sales charts have caused Volkswagen to become Germany's poorest performing blue-chip stock to this point in 2004, having lost more than 10 percent. Being that the previous Golf was responsible for approximately half of the VW division's profits, its success is paramount.