Volkswagen to Debut Larger, More Affordable Jetta Today

Volkswagen AG reported that it will increase the size and slash the price of the new-model Jetta compact vehicle, the German automaker’s best-selling vehicle in the United States, as it attempts to double sales in the U.S. market by 2012.

The retooled Jetta will cost $1,700 less and will be 3.5 inches longer than the current model when it goes on sale in October, VW announced.

The biggest automaker in Europe, Volkswagen is moving more production to North America to help cut costs and compete with compact-car titans Toyota and Honda, reported Stefan Jacoby, CEO of VW’s U.S. unit. The automaker is shooting for 400,000 U.S. sales for the VW brand by 2012, contrasted with 213,454 last year.

“Model by model, our lineup will be competitively priced so that we will be able to compete in the American market with our products,” said Jacoby at a press briefing yesterday while introducing the vehicle in New York.

Shifting additional production to North America from Europe gives Volkswagen a buffer against fluctuations in currency and trims costs, Jacoby noted. He underscored the automaker’s goal to raise North American output to 75 percent of sales in the area by 2013, up from approximately 60 percent in 2009.

VW will become completely autonomous of the euro-dollar exchange rate by 2012-2013, and the United States operation will be making a profit by then, Jacoby believes. The automaker, which recorded a profit of 960 million euros, or $1.17 billion last year, does not single out its U.S. results, and Jacoby would not provide specifics on how much the operation lost in the market in 2009.

Drastic Price Cut

VW intends to sell the new Jetta for approximately $16,000, a significant drop from the existing base price of $17,735. The new price would bring it nearer to the base prices of the Honda Civic and Toyota Corolla, priced at $15,455 and $15,450, respectively, according to the automakers’ Websites.

“They’re going after big-volume products,” explained Jeff Schuster, J.D. Power and Associates’ executive director of global forecasting, in an interview over the phone yesterday.

Volkswagen sold 46,173 Jetta sedans and wagons in the U.S. this year through May, which is 27 percent more than last year. During the same time, sales increased 17 percent for the Toyota Corolla and 9.9 percent for the Honda Civic.

If Volkswagen “can improve styling with more competitive pricing, that combination should provide some lift to sales,” Schuster explained. He called the revamped Jetta “more refined from a styling standpoint, like it’s grown up a bit.”