Skip to main content

Evidence Exhibit #127 In the Case of Market v. Small Cars: Volkswagen Considering Pulling the Up City Car From Europe

The global auto industry is not a place in which small car production is as straightforward as it was a decade or two ago.

Brought closer to home, Americans are buying roughly 30-percent fewer subcompact cars now than they were just three years ago. With next to no fuel economy advantages; limited payment upside; and less refinement, power, and space, why would a car buyer choose a subcompact over a compact sibling? Most buyers don’t. In the United States, compact car sales are five times stronger than subcompact sales. August’s top three compacts (Civic, Corolla, Cruze) outsold their subcompact brethren (Fit, Yaris, Sonic) by more than seven-to-one.

Many automakers don’t even bother selling their smallest cars in North America. Mazda’s latest 2 never saw U.S. import. FCA has left the compact market, having long since left the subcompact sector to rivals. Subaru doesn’t dive below the Impreza platform. And Volkswagen stops at the Golf, leaving the subcompact Polo for more small-car-friendly countries.

Der neue Volkswagen up!

But how keen on small cars are those other countries? In some instances, not keen enough. Volkswagen boss Herbert Diess tells Autocar, “Selling small cars is not easy.” And he’s clearly not just talking about F-150-loving America. “It’s a very European problem,” says Diess. As a result, the Volkswagen Up city car, a Lupo successor, may pull out of Europe in favor of emerging markets only.

That means the same could happen for the Up’s Skoda sibling, the Skoda Citigo. “Of course, every car needs a sustainable business model and we want to improve on all our KPIs [key performance indicators] but we must also remember the Citigo is the entry point to our brand,” says Skoda’s CEO Bernhard Maier. “In emerging markets especially it plays a very strong role.” Based on demand in countries where small cars are bringing mobility to the masses, Maier doesn’t see production of the Up/Citigo ending.

But in Europe, specifically, there are real difficulties making A-segment cars sufficiently affordable to meet demand. Attempting to bring a small car like the Up into a low-emissions category requires high costs, but if those high costs are passed on to the consumer, virtually the whole appeal of the city car is lost. As B-segment cars such as Volkwagen’s own Polo become cleaner emitters, they compete too closely with A-segment cars in Europe’s regulatory environment.

Volkswagen up!

Volkswagen can’t sell dirty Ups in Europe, but buyers won’t pay for an Up that costs nearly as much — or as much — as a Volkswagen Polo.

Presently, in the United Kingdom for instance, the Up is priced around 24-percent below the Polo. But that gap is tight. The Polo, for example, is a third less costly than the larger Golf. And the 24-percent reduction in cost from the Polo to Up represents the equivalent of just USD $3,700. Across Europe, the Up’s limited scope has produced ever decreasing sales. Up volume fell 4 percent in 2014, 16 percent in 2015, and 8 percent in 2016 61,246 before sliding 3 percent through 2017’s first seven months. The Polo is more than three times more popular than the Up in Europe; the Golf is nearly five times more popular.

If the Up could deliver a superior economic advantage, something Herbert Diess says is increasingly challenging, Volkswagen wouldn’t be considering the removal of the Up from its European lineup. Americans understand this already — otherwise, the 36-mpg $17,065 Fit would be outselling the 36-mpg $19,615 Civic seven-to-one rather than the other way around.

This article first appeared on thetruthaboutcars.com

The post Evidence Exhibit #127 In the Case of Market v. Small Cars: Volkswagen Considering Pulling the Up City Car From Europe appeared first on VWVortex.



from VWVortex http://ift.tt/2xZYbZj
via IFTTT

Comments

Popular posts from this blog

Watch: The Stig Drives (nearly) Seven Generations of Golf GTI

With Volkswagen announcing “major” updates to the Golf, it seems an appropriate time to look back on what we’ve had so far. And who better to guide us through the rich history of the most popular European car ever made than Ben Collins, the former Stig? Some say he’s never met a GTI he doesn’t love, and that he can’t grow any of his own facial hair. All we know is … Ben Collins is actually a pretty solid presenter. Working his way through seven generations of the GTI (skipping over the Mk6) Collins tells us a little bit about each one and matches each mark to its corresponding facial hair craze. The Mk1 GTI for instance, is light and quick, but can lose traction under hard acceleration (in heavy rain). Despite that, Collins calls the Mk1 a “pure gem.” The Mk4, meanwhile, is a powerful return to form after the perhaps too sensible Mk3. Collins ends in the only way he could, with the Mk7, which accelerates faster than a Lamborghini Countach and is all kinds of wonderful. Watch, ...

Watch: The Story of the Ads that Made VW Big in America

The ads for the original Beetle are almost as famous and well-loved as the Beetle itself. Looking back now it’s easy to forget, though, just how easily things could have wrong. A new short from Dial M Films tracks the history of those early Volkswagen ads that sold America on the people’s car. The story, of course, begins with the visionary agency that made the ads: Doyle Dane Bernach (DDB). As a popular agency for Jewish products, no agency was more aware of the implications of Volkswagen, and no one, it seems, was more skeptical of the brand than DDB. “Remember Those Great Volkswagen Ads?” from Dial M Films on Vimeo . William Bernbach, though, was adament that the firm take the client, probably as a way of attracting other lucrative automotive clients. Saddled with a client that he didn’t want, art director Helmut Krone says in the film that he originally came up with ads that were all wrong. Krone tried to do what other manufacturers did and was intent on selling the Beetle ...

Watch: The Zerouno Cruis’n USA

ItalDesign is drumming up excitement for its new supercar based around the same 5.2-liter Audi V10 that powers the R8. Naturally, it hit the road for a cruise around California last week to celebrate Monterey Car Week. There isn’t much in the way of V10 noise—which is a real shame given the sound it makes—but you do at least get a good look at the car inside and out in this video. With a body made entirely of carbon fiber and designed to be as aerodynamic and light as possible, ItalDesign figures that it will be good for a 0-60 time of just 3.2 seconds. “We put it our best skills into the production of the first car,” said Massimo Bovi, head of pre-series production, when the Zerouno was first unveiled in Geneva earlier this year. “Using some of the finest productions methods and engaging our high-skilled workers.” The car features clever aero tricks gleaned from single-seat racing, like a y-duct up front to improve downforce and turn-in. Available in a number of trim levels, the...