VW Could Lose A Billion

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Quote »VW Could Lose A BillionRough sales times at home and in the U.S. draw Germany�s big automaker into the red.by Joseph SzczesnyVolkswagen of America could lose as much as $1.2 billion this year on its business in the U.S., Canada, and Mexico.Bernd Pischetsrieder, Volkswagen AG chairman, disclosed VOA's problem recently during an interview that was published by an Italian newspaper. He told the Italian publication Il Sole that VW "will lose nearly 1 billion euros in the United States this year due to the weak dollar and the (product) lineup which is waiting to be renewed."There would probably be an improvement in 2005 thanks to the new Passat and Jetta cars, "although it will be very difficult to return to profit as soon as 2005," Pischetsrieder was quoted as saying.Since the interview, no Volkswagen official has come forward either in public or private to amend Pischetsrieder's comments to the Italian journalists.The shift in the value of the euro has meant Volkswagen's cars are more expensive to build but the company cannot sell them for any more money in the competitive U.S. market and in fact has had to discount some models.The last new Volkswagen models to reach the U.S. market were the Touareg and the luxurious Phaeton, and they arrived a year ago. The Touareg has done well but the Phaeton has not lived up to expectations. Volkswagen officials have said privately the lack of new products has clearly hurt sales in North America this year.Volkswagen of American reported that its September sales dropped to 20,872 vehicles from 27,904 in the year-ago month, while U.S. sales in the first nine months of 2004 fell 16 percent from last year to 195,530 vehicles. The sales decline has continued despite the fact Volkswagen has scrapped its long-held aversion to incentives and started to offer them in an effort to stay competitive with aggressive Asian and American competitors.Volkswagen also has been hurt by declining sales of new vehicles in Germany, which is its primary market and which some analysts are describing as the "new Japan" because of the economic malaise that now grips the country. The soft German economy has been the principal factor in the sales decline, Volkswagen officials have said. But the soft market also has led Volkswagen into an escalating incentive battle with GM's floundering Opel unit.Meanwhile, Volkswagen officials continues to talk with its unions about a wage agreement and cuts in staffing levels that would help make the company's factories more competitive on the global market. So far, however, the two sites have not been able to reach an agreement on the cost-reduction package.Volkswagen has recruited Wolfgang Bernhard, the former DaimlerChrysler executive, to help spice up its product line. The 44-year-old Bernhard is already a full member of the board of management of Volkswagen AG. His appointment initially comes without a post. Bernhard is scheduled to move into a managerial responsibility for the Volkswagen brand in February then take up the post as head of the company's Volkswagen automotive brand no later than Jan. 1, 2006.Pischetsrieder said the board is looking forward to having Bernhard join the company. "Bernhard will manage the VW brand independently as soon as we have fully completed his introduction to the company," Pischetsrieder said. Bernhard, despite his relative youth, has a reputation for developing new products like those that are boosting sales at the Chrysler Group today.Source: http://www.thecarconnection.co...=7683