News - Volkswagen
VW waits for future SUV sales boom
Passenger car sales still VW’s main business but more SUVs on the horizon
10 Jul 2017
VOLKSWAGEN has acknowledged that its lack of SUV offerings is hampering its sales growth in Australia, but some new nameplates and a number of model updates should help turn things around.
The German car-maker has sold 29,129 vehicles in Australia to the end of June, representing a 2.3 per cent, or 514 unit dip over the same period in 2016.
So far this year, 52.3 per cent of VW’s volume in Australia is made up of its passenger car models, with just 23.5 per cent coming from the burgeoning SUV segment, only marginally ahead of the 23.2 per cent that is made up of light–commercial vehicles.
Volkswagen Group Australia managing director Michael Bartsch told GoAuto that the company’s underrepresentation in the SUV segment was clearly having an impact on sales.
“We have a number of challenges which affect the visuals of our sales performance,” he said at the Golf 7.5 launch in Victoria last week.
“First of all, we don’t have the breadth that we would ideally like in the SUVs. We don’t have the (Mazda) CX-9 competitor, or the CX-3 competitor, and so on. And when 51 per cent of the market is SUV, but it represents only 23, 24 per cent of what we’re selling, you can see that there’s a massive disconnect.”
To the end of June this year, VW has sold 15,252 passenger cars for a 6.6 per cent share of the overall passenger car market.
The figure is 18.6 per cent down on the same period last year, largely due to sales drops from the soon-to-be-replaced Polo (-35%), Passat (-16.1%) and the Golf (-17.4%), which has been in runout ahead of the refreshed model arriving in showrooms this month.
Left: Volkswagen Group Australia managing director Michael Bartsch
“There are some life cycle issues there,” Mr Bartsch said. “But that is completely normal because we’re in a sell-down mode on the Golf 7. And Golf is one of our pillar models. And when Golf is performing normally it’s up to 1500 units a month.”
He added that while the company was committed to supporting a strong passenger car line-up, Volkswagen would not discount its cars to compete with other brands in the market.
“The reality is that if you look at that passenger vehicles segment collectively, all brands have an investment in passenger vehicles and the market is shrinking. And so it then becomes a question, how much are you prepared to throw at it to defend volume? “And Kia Cerato and Hyundai i30 are good examples of what you need to do to be able to maintain volume there. And the way you defend volume is now very much driven by what you’re prepared to push the price point down to. We’re not prepared to do that. Not only are we not prepared to do it but our product doesn’t allow us to do it.
“So we would rather take an approach of a volume that allows us to sustain what we consider a long-term position in residual values. And the last thing we want to do is defend a volume with a price point that then, when a new car comes, you can’t defend the price point because the market’s been trained to believe that the price point is a lot lower.
“Again, i30’s a good example. (Holden) Astra was a good example of trying to re-price position a car after it had been discounted for so long. It didn’t work.”
Despite the lack of SUV models on offer in its line-up, VW’s SUV sales were well up on last year’s efforts, with 6847 sales representing a massive 65 per cent lift, almost entirely off the back of the successful Tiguan launch.
The Tiguan moved from the small-SUV category to the mid-size segment with the launch of the new larger model and it now competes with the top-selling Mazda CX-5 as well as the Hyundai Tucson and Toyota RAV4.
Mr Bartsch said he was pleased with the performance of the Tiguan since its launch, but added that it could be doing even better if there was more stock available.
“The upside of the story is Tiguan performance demonstrates exactly what we can do in that segment when we have the product. So it’s not a brand problem, it’s purely a product availability problem. We’ve been selling close to maybe 900 a month on average with Tiguan.
“We don’t know what the upper limit on that is because we can’t get the cars.
But I think we should be doing something between 1300 and 1500 a month. That’s where we could get the legs on that when we have the full range.”
VW sold 5190 Tiguans to the end of June, as well as 432 Passat Alltracks (+23.4%), which is classed as a large SUV, while the ageing Touareg dipped by 24.2 per cent to 878 units.
A number of SUV models are on the horizon for Volkswagen, including the seven-seat Tiguan Allspace early in 2018 and the all-new five-seat Touareg large SUV that is set to be revealed before the end of this year ahead of an arrival in showrooms later in 2018.
The seven-seat Atlas large SUV is still unlikely to make to Australia as it is only being produced in left-hand drive, but VW will fill another gap in its line-up soon.
A sub-Tiguan crossover, likely dubbed the T-Roc and based on the concept of the same name, is expected to be revealed soon, with VGA general manager of communications Paul Pottinger telling GoAuto that the company had its hands in the air for the Mazda CX-3 rival.
“We would love to have the T-Roc today, quite frankly. It is something we are working hard on, getting T-Roc here.” Other new models coming include the freshly revealed next-gen Polo, due early next year, the just launched Golf 7.5 range, more Amarok variants and the Arteon flagship sedan.
However, the ageing Golf Mk6-based Jetta sedan seems unlikely to get a replacement, with reports suggesting that the next-gen version will only be built in left-hand-drive configuration.
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