It’s been a long time coming, but Volkswagen is trying to regain its North American charm. There will be a new electric hippie bus, and a new resurgence of a popular brand, Scout, which will build an electric pickup truck and off-road SUV.
“We have to make the brand likable and iconic again,” Scott Keogh, CEO of Volkswagen Group of America, said in an extensive interview with The Globe and Mail. “The factory is one thing, profitability is one, product portfolio is one, leadership in electricity is one – these are all good things, but we have to put the brand back where it belongs.”
The Volkswagen Group is barely second to Toyota when it comes to being the world’s largest automaker. But so far this year in terms of manufacturer sales, it ranked eighth in Canada, and in the first quarter of 2022 it ranked tenth in the United States, according to Good Car Bad Car. Last year, just over 60,000 Volkswagens were sold in Canada and 375,000 in the United States. About 40 percent of the automaker’s sales are in China.
Kyu’s comments came on the heels of his boss’s statement 60 minutes that “we have to fit in in the united states”
“It’s tough,” Volkswagen Group CEO Herbert Diess said in a conversation last month with journalist Leslie Stahl on the CBS news show. “First of all, I have to accept, we lost ground here in the US, and I think we didn’t take the American customer seriously enough. We tried to sell the European product here in the US”
In North America, Volkswagen is known for its beetle and hippie bus. Its other cars, such as the Golf, Jetta and Passat, are well received, but do not have a niche. Volkswagen has a plan to change that.
First, I made an early commitment to the future of electrification. The automaker was forced to change course after the 2015 DieselJet scandal, in which it admitted to falsifying emissions tests and eventually paid more than $30 billion in damages and recalled 11 million vehicles. At the same time, it retooled assembly plants in the United States and Mexico to make popular SUVs such as the Atlas and Tiguan. It also lowered its prices, agreeing that buyers would not pay a premium for a non-luxury European car. Now, it offers the ID.4 electric vehicle, which is currently manufactured in Germany but will begin domestic production later this year at the VW plant in Tennessee.
Volkswagen also announced this week that it will be bringing an all-electric pickup truck and a durable electric SUV to the North American market, under the Scout brand name.
“Electricity provides a historic opportunity to enter the highly attractive pickup and R-SUV segment as a group, underscoring our ambition to become an important player in the American market,” Dess said in a statement on Wednesday.
The storied Scout brand was operated by International Harvester from 1961 to 1980, acquired by VW when it bought the remains of International two years ago. The Scout was an all-wheel drive alternative to Jeep and Land Rover, and the new Scout will be an American competitor to the hugely successful Jeep Wrangler and Ford Bronco.
This will be the first time Volkswagen has launched a new brand in the US and production is scheduled to begin in 2026.
Keough said localization is important for a global company like Volkswagen, to help stabilize the cost of construction in the markets where its cars are sold. Volkswagen’s two North American plants in Chattanooga and Puebla, Mexico, produce about 94 percent of the vehicles it sells in this region.
“We import what I would call ‘candy’ – Golf Rs, GTIs, Arteons, and of the vehicles we make in this market, about 85 percent of our supply base and materials are localized here,” Keogh said. And by “translating here” (I mean) Mexico heavily, the United States heavily, and Canada a little bit.”
That may change, which helps explain Kew’s visit.
Volkswagen Group recently announced an investment of $7.1 billion for North America, nearly all of it for the modernization of its two existing assembly plants and an engine manufacturing plant in Mexico to produce electric vehicles and engines.
These are just investments they have in the books, Keough said. “One of the reasons I’m here is to keep looking at opportunities in Canada. Whether it’s on the battery side of the equation or the mining side of the equation and the materials that go along with that. I think Canada as a country is doing a great job of positioning itself, putting its ecosystem into range. the broadest.
“Make no mistake: We see ourselves as a region, and it’s a smart business to balance your area: balance that from a currency standpoint and, frankly, what the markets can do better.”
In Quebec, General Motors is building a $500 million battery materials plant to take advantage of local access to battery minerals. In Ontario, Stellantis — the company that owns Chrysler and Jeep, among others — announced a $5 billion battery plant in March, to be built with LG Energy Solution Ltd. It is the largest investment in the history of the automobile sector in Ontario.
Ontario Premier Doug Ford said when announcing the Stellantis project, “As we provide game-changing investments, we are also connecting the resources, industries, and people of Northern Ontario with the manufacturing forces of Southern Ontario to build local supply chains.”
None of this is lost in Volkswagen North America.
“We are now going through the largest single industrial transformation, in terms of investment, in a hundred years,” Keogh said. “At a minimum, we’re looking at battery production in America today (for all new vehicles), right now, maybe 700,000 or 800,000, and that would need to go to eight, nine or 10 million in seven and – half a short year.
“It’s not like we can just pick up the phone and say ‘send this to us.’ This is deep mining, deep infrastructure, deep logistics, and deep impacts of the USMCA (US, Mexico, Canada) back and forth. There are huge opportunities for industrialization in the whole region.”
But even with billions of dollars invested, how does Volkswagen stand out as a car manufacturer in a crowded market?
“The next car we’re going to launch is going to be the Aero – I would call it a very elegant, sporty-type car,” said Keogh, referring to the all-electric Aero B concept that was first seen as the identifier. The Vizzion concept at the 2018 Geneva Motor Show. It’s meant to be a direct competition for the Tesla Model 3, with a range of 700 km and a production version late next year.
“The car then it will be ID.Buzz, and then the next major project we are working on, which will be localized in this region (North America), will be a mid-size SUV, and more in the Atlas region.”
and mojo? That’s where the funky ID.Buzz comes in, with a release date here in 2024. It’s an all-electric minivan that, as Keogh recently confirmed, will also be offered as a factory-made pickup.
“The reaction to the ID card,” he said, “was amazing.” And the California camper version “will either come with the launch or shortly after the launch. There’s no way you can have a California that can’t be sold in California, so we have to do that.”
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