Customers Wanted V: A Tale of Two Car Companies

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us…

Charles Dickens wrote his now famous introduction to describe Paris before the French Revolution. The Victorian period writer’s quote appears quite applicable to Volkswagen Group, which builds and markets among several brands, Volkswagen and Audi.

Volkswagen of America (hereafter VoA) repeatedly fails to capitalize on its advantages. In the early 1970s, Volkswagen faced the first wave of imports from Japan. Honda’s CVCC was everything the iconoclastic Bug was not. The CVCC boasted a fuel efficient engine and solid quality. For all its design pizzaz, the Bug featured a technologically unsound engine and okay reliability. Without a Next Vehicle, Volkswagen drivers abandoned the Volkswagen brand.

In the late 1970s, America found itself limping through its second oil shock in less than 10 years. Sales of the VoA-branded Rabbit spurted upward thanks to its diesel engine. The oil burner though delivered little of the get up and go demanded by American customers. As Americans adjusted to paying 80 and 90 cents for a gallon of gasoline, the Rabbit and its pokey engine and stiff handling fell off the pace. Worse, the Rabbit was not a particular well built car. By the late 1980s, Volkswagen contemplated closing VoA and withdrawing from the American market.

In the late 1990s, a new generation of drivers were lured to VW showrooms thanks to quirky ad campaigns, and refreshed modernist designs such as the Jetta .

Thanks to the quality issues that bedevil VW-built cars, drivers spent more time in the customer service waiting lounge than behind the wheel. VoA’s sales have dropped to Kia levels, and VoA is trying to figure out how to gain sales traction.

If things are down right horrible for the VW nameplate, then things are incredibly upbeat for the Audi nameplate. In the past 10 years, Audi went from a mover of VW badge engineered cars to the automotive brand that can do no wrong. Audi’s lack of history and rivals helped tremendously.

Mercedes refused to and BMW was unable to go down market. Mercedes’ customers made their concerns known about Daimler Benz’s (now Daimler Chrysler) attempt to bring a sub $40,000 car in the performance market. BWM’s 1 series, a lower cost alternative to the 3 series, never materialized in the American market. Americans continued to think of Acura as a badge engineered Honda. Lexus and Infiniti ignored the market.

The TT embodies everything Audi does right. The soft top roadster screams drive me at a time when cars like Nissan 350Z and Mazda’s RX8 quietly suggest, “Sit back. I’ll drive.” Competing products suck on the dust produced by the TT’s 3.2-liter V6. Finally, the TT offers a boot beyond the gag gift variety. Um, Pontiac, you may want to look into that idea.

Finally, Audi appears to avoid the missteps created by the ill-fated Rabbit by producing a performance car with a diesel engine. It is a long way from winning ALMS races with an oil burner and selling them to Americans. Compared to other automakers though, Audi might be best positioned to capitalize on American’s resurgent interest in diesel.