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Volkswagen aims for sales growth with SUV expansion

Crossroads: The T-Cross (left) will become Volkswagen Group Australia’s entry-level SUV when it goes on sale alongside the similarly sized T-Roc (below) early next year.

T-Cross to outsell more premium T-Roc as Volkswagen grows Australian SUV volume

Volkswagen logo22 Feb 2019

VOLKSWAGEN Group Australia (VGA) says it has a “significant volume opportunity” with its just-confirmed T-Cross and T-Roc small SUVs that will enter the fastest-growing new-vehicle segment when they go on sale early next year.
 
Speaking to journalists this week at a media event in Brisbane, VGA product marketing manager Jeff Shafer stressed the importance of the two new models, considering that small SUVs were the fourth most popular type of vehicle last year, with their sales up a market-leading 18.4 per cent over 2017.
 
“They’re going to be two big pillars to growth for the Volkswagen brand in Australia,” he said. “The small-SUV segment’s been one of the stronger-growing segments over the last two, three years.”
 
Mr Shafer said the T-Cross will be the “mainstream seller”, with its “pretty sharp” pricing expected to kick off “right in the heart of the small-SUV market”, at less than $30,000.
 
“What we’re saying today is that it will start with a two – that doesn’t necessarily mean $29,990,” he said.
 
“(But) it’s never been our target to be the cheapest in any segment. We want to offer the best product and the best value.”
 
Conversely, Mr Shafer said the T-Roc is “the more premium” of the two, with this positioning reflected by its targeted starting price of sub-$40,000.
 
“T-Roc, I think it’ll be a bit more exclusive than T-Cross, so not as high of a volume,” he said. “It’s not there to sell, 10,000, 20,000 … but it’s still going to do a reasonable volume for us.”
 
When asked if the T-Cross will eventually surpass the Golf small car’s volume and become VGA’s best-selling model, Mr Shafer said: “Golf’s in a league of its own.
 
“We’re selling … 18,000, 19,000 a year, so we won’t be seeing that in the SUV range in the short term.
 
“Over time, I’d expect (T-Cross) volume to grow, but it’ll be another tier below (Golf).”
 
While unprecedented overseas demand led to a delayed Australian launch for the T-Roc, Mr Shafer was unsure if the T-Cross will be subject to the same supply constraints when it launches in Europe in April.
 
“Until (it goes on sale), it’s hard to judge capacity versus demand, but I think it’ll certainly be a volume-seller within our range,” he said.
 
“I’m not going to speculate on exactly what the number’s going to be, but certainly in the hierarchy of products, this will be lower than Tiguan in the short term.”
 
In 2018, the Tiguan mid-size SUV (9146 units, -4.9%) outsold the Tiguan Allspace seven-seater (2454) and Touareg large SUV (939, -41.7%) in VGA’s SUV range.
 

All up, VW sold 14,195 SUVs last year, up 5.6 per cent on 2017 but not enough to cover its 6.0 per cent fall in passenger car sales and still only representing 25 per cent of its total volume.

 

Across the industry, SUVs last year accounted for 43 per cent of all new-vehicle sales in Australia, and are continuing to rise.

 

Given that the T-Cross and T-Roc will be late to market, VGA has to work on educating new-vehicle buyers about its broader SUV range, according to Mr Shafer.

 

 
“Golf’s always been known as a benchmark in its segment, and we think we can be the benchmark small SUV, building off those Volkswagen characteristics,” he said.
 
Meanwhile, the third-generation Touareg large SUV will arrive before the T-Cross and T-Roc when its 190TDI Launch Edition variant heads Down Under in May this year, with full-time 170TDI and 210TDI variants expected locally before 2020.
 
While the Touareg is capable off-road, a more specialised model based on Ford Australia’s next-generation Everest seven-seater could join VGA’s SUV line-up if Volkswagen Group’s recently announced alliance with Ford Motor Company ends up covering such product.
 
Mr Shafer said he would give such a model “its due diligence, in terms of analysing whether or not there’s a segment there”.
 
“If there was an opportunity, we’d have a look at it … (but) it would have to fit within our range,” he said.
 
“We’d have to be confident about the pricing and that there’s enough customers there to justify that.”
 
As reported, the Atlas upper-large SUV currently available in left-hand-drive markets, including North America, could head Down Under in second-generation form in the first half of the next decade if it becomes available with right-hand drive and diesel engines.
 
More variants of the Tiguan will be introduced this year, including the entry-level 110TSI that will return to sale at the end of the third quarter, as well as specials after the “massive success” of the 162TSI Wolfsburg Edition launched in November 2018.
 
While the Mexican-sourced Tiguan Allspace only entered showrooms six months ago, it was subject to unannounced price adjustments in January this year after the Trans-Pacific Partnership’s free-trade agreement kicked in on December 30, 2018.
 
“That’s been a product we’ve been really happy with,” Mr Shafer said. “It’s building momentum month by month. It takes a little bit of time for people to get their heads around what it means and what it is.”
 
As a result, the Tiguan Allspace decreased in cost between $840 and $1340, meaning it now attracts a $1500 premium over its five-seat counterpart, as opposed to the $3000 to $4000 price difference it launched with.

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