Volkswagen to Modify New Vehicle Introduction Strategy

Current All or Nothing Launch Strategy is Boom or Bust for Dealers

Its a classic case of the tortoise and the hare. The pace of new product launches every four years is frantic for Volkswagen, however just before the wave of new models is released a sales siesta takes place that causes the Wolfsburg, Germany automakers beancounters to go frantic for different reasons - one being a lack of cash.

Of course its only natural for sales volumes to ebb and flow from year to year for a variety of reasons. The most obvious has to do with specific models. When a car is at the end of its "shelf" life it usually creates less of a stir in the market due to outdated styling, less trendsetting features and the fact that most people who were going to buy it already have. When the new model comes out theres a general buzz among those that old the outgoing model, with many stepping up to purchase. After the new car has been out for a while, and providing its different enough in appearance over the old model, those that may have not considered buying the car before will either step up from a car from the same brand or swing over from an altogether different automaker (conquest sales).

The product for sale isnt the only reason for fluctuating sales volumes, with the general economic market playing a key role, but thats nothing that can be controlled by a car manufacturer.

At the automakers recent annual meeting, Volkswagen AG CEO Bernd Pischetsrieder acknowledged that its bipolar product cycle and dollar to euro ratio, among other contributing factors, have cost its North American division more than $1 billion last year.

The problem the brand faces now is that while the Touareg luxury sport utility and the low-volume full-size luxury Phaeton have come on line this year, many of its core products are in need of updates. The Golf has been released in Europe, and after a slow start due to intense competition for compact hatchbacks is now getting the attention its maker feels it deserves. While the competition in North America has heated up this year with the new Mazda3, the 2005 Golf shouldnt face any initial sales problems when it finally arrives. A new Jetta is expected shortly thereafter, followed by a completely revised Passat. Somewhere along the way a Golf/Jetta based SUV is slated to pump up the brands sales volume, but again it wont get here soon enough to solve VWs current slow sales crisis.

Volkswagen will begin to break up its current launch clustering pattern after the next run of new models, expected to have run their course in just over a years time. Until then the automakers U.S. division will counter the rising euro with incentives averaging approximately $2,000 per car. The company expects to achieve similar a similar sales volume as last year, equaling about 300,000 units.