Volkswagen Touts Lease Deals to Lift Jetta and Passat By JOHN D. STOLL DOW JONES NEWSWIRES August 25, 2005; Page D3
Volkswagen AG, criticized of late for moving away from core enthusiasts in search of more affluent buyers, is back to pushing value and offering cut-rate bargains. VW hasn't followed the Big Three's move to slash sticker prices or offer the popular "employee-pricing" deals that boosted summer sales for General Motors Corp., Ford Motor Co. and Chrysler Group, the U.S. division of DaimlerChrysler AG. Instead, VW is touting special lease deals on certain new models -- to speed the launch of two redesigned vehicles, the Jetta and Passat sedans -- and 1.9% annual percentage rates on car loans. VW in July started offering a $199-per-month lease on base-level Jettas. The deal undercuts competitors, such as the Ford Focus, which is smaller and less expensive than the completely redesigned Jetta and has been on the market for six years with few updates. Ron Murphy, general sales manager at Hallmark Volkswagen in Franklin, Tenn., said the company was pressured to budge on incentives, following a long history of avoiding the rebate game. He said buyers are flocking to the showroom in response to the new deals. The aim is to generate momentum going into 2006, when the auto maker hopes to sell 300,000 vehicles, after a string of disappointing sales results in recent years. VW began a precipitous market-share decline in 2003, as sticker prices started to escalate and the long-term resale value of its cars began to fall, according to Automotive Lease Guide President Raj Sundaram. VW's struggle in the U.S. mirrors the company's problems globally, brought on by the strong euro, quality issues, slow-selling models and high costs, which have led to a pool of red ink for the Wolfsburg, Germany, company and drastic restructuring. Len Hunt, vice president in charge of Volkswagen of America Inc., said the company's volume-chasing strategy in the U.S. is a break from recent attempts to transition VW's lineup -- long seen as quirky and affordable in the U.S. -- to a more elite status. VW's addition of an expensive sport-utility vehicle and a large sedan costing as much as $96,000 was hard for loyalists and value-minded buyers to swallow. VW Managers in Auburn Hills, Mich., where its U.S. operations are based, decided to rip a page from crosstown competitors' play books. "Before, we were just a little bit too high, and everybody said, 'Volkswagen is going luxury; it's going upmarket; it's moving its pricing away,' " Mr. Hunt said. "Actually, we're back now to offering affordable German engineering, and it's resonating with customers." Mr. Hunt insisted VW isn't simply mimicking Detroit but instead is forging its own value-pricing philosophy. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~| Find out how CFTicket can increase your company's customer support efficiency by 100% http://www.houseoffusion.com/banners/view.cfm?bannerid=49 Message: http://www.houseoffusion.com/lists.cfm/link=i:5:171194 Archives: http://www.houseoffusion.com/cf_lists/threads.cfm/5 Subscription: http://www.houseoffusion.com/lists.cfm/link=s:5 Unsubscribe: http://www.houseoffusion.com/cf_lists/unsubscribe.cfm?user=11502.10531.5 Donations & Support: http://www.houseoffusion.com/tiny.cfm/54
