VW Group CEO Jonathan Browning -- shown here at the 2012 Detroit Auto Show.
Volkswagen’s top American executive is leaving the automaker — a move that comes at a time the German maker is struggling to reverse an unexpectedly sharp slump in U.S. sales.
The 54-year-old Jonathan Browning’s departure comes just over two years after he took over Volkswagen Group of America at a time when a new plant in Tennessee and a flood of new product appeared to be driving the maker towards an ambitious goal of reaching 800,000 U.S. sales annually by 2018.
But even as U.S. car sales have surged to their highest level in six years, Volkswagen has reported a 5.2% decline for the year, demand plunging an even more disconcerting 16% in November compared to year-earlier numbers.
The automaker didn’t try to connect the dots, however, saying only that the British-born Browning is returning to the U.K. for “personal reasons.” That’s perhaps fitting because the German maker’s global CEO, Martin Winterkorn, was quoted in a VW news release Thursday asserting that, “For us, it’s not just about unit volumes.”
But there’s little doubt that the sudden flame-out in the American market has been a disappointment, especially considering the high hopes the maker had just two years ago, following the opening of its new plant in Chattanooga, Tennessee. Demand for the latest-generation Passat sedan initially exceeded expectations and, if anything, VW officials barely disguised their hope that they might soon be able to justify a major expansion of the facility – which was designed specifically to allow a quick doubling of capacity.
(VW one of the few losers in a strong November. Click Here for the story.)
Why the decline has been a matter of debate. VW has long struggled to reverse a reputation for quality problems, though it tried to offset concerns about price by offering new base models on a par with Japanese and American competitors.
Browning himself has been warning that the maker needed to fill key gaps in its line-up, particularly between the small Tiguan crossover and the much larger Touareg CUV. In fact, VW is expected to decide in the coming weeks whether it will build a midrange ute, based on the CrossBlue Concept, at the Chattanooga plant.
(VW expected to make decision on CrossBlue before year-end. Click Herefor more.)
Even with this year’s decline in sales, Browning recently sounded an upbeat note, pointing out that VW of America sales have doubled since 2009 and “we are confident we will close out a second consecutive year with over 400,000 vehicles.” But that remains well short of the 800,000 target set by Browning’s competitor for 2018.
Despite the sales shortfall, “I didn’t see this coming,” said Stephanie Brinley, of consulting firm AutoPacific, Inc. And she cautions that Browning’s “successor faces the same, ambitious target, so changing the leader doesn’t mean they’re closer to meeting it.”
Browning’s replacement is 51-year-old Michael Horn, a 23-year Volkswagen veteran who has worked on brand strategy and who has, since 2009, headed VW’s Global After Sales operations.
(VW may launch new budget brand in China. Click Hereto find out more.)
There could be many reasons for Browning leaving but I’m guessing based on past history it has to do with U.S. sales volume and corporate philosphy. Volkswagen’s enfatuation with being the #1 auto maker in sales volume may cost them dearly if they ever attain the goal.
VW’s recent increase in U.S. sales was due primarily to lower sticker prices and competitive lease deals. That buys some new sales but VW has to deliver after the sale as well and that has always been their Achilles’ heel in the U.S.
The “VW Lite” experience may not be all it is cracked up to be. They have a range of sedans sitting atop each other in the market from Jetta to Passat, but have not done much to differentiate them for the consumer’s shopping purposes.
I also wonder how much an 800,000 unit goal will create brand dilution? There is a very real and valuable snobbery that comes with VW ownership (much like Saab and Volvo once enjoyed.) Seeing one everywhere you turn cannot help but deflate that image.
Plus, the only real genuine performance models are the in the Golf range, models that arguably are the last ‘real’ VW experience.
But, Germans being Germans will expect the orders followed to zee letter, on zee timetable. Failing that is just failing.