VW’s diesel models are now outselling the Ford Fiesta and most other US market sub-compacts. What’s more, Volkswagen of America has just had its best year since 1972 thanks in no small part to TDI engines.
We all know how successful the little Ford continues to be in China, Europe and Brazil but this segment is not a major one in the US. Just ask Toyota, which cannot be making anything but losses on the only modest numbers of *Yaris (see below) five-doors that it ships in from Japan, or Honda, which has recently turned to a plant in China for its Canadian market **Fit. I shall also be generous to Kia and Nissan and let them claim that the Soul and Versa/Tiida, each of which did close to 100,000 sales in 2011, are sub compacts. I still say they’re compacts.
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Given the US car buyer’s relative lack of enthusiasm for any sub-compact, selling 68,574 units of the Fiesta in calendar 2011 is pretty good going for Ford Motor Company. Ergo, choosing to build the car for North American markets in low-wage, high-quality Mexico has also proved to be a sensible decision.
Ford is clever enough to have learned that even with a good looking little car and savvy marketing, Americans really still aren’t too interested in small, low cost vehicles: those who are no longer in their 20s and on a limited budget mostly go for a larger second hand sedan, trends continue to show. Just ask Fiat as it tries to put a positive spin on the decidedly average success it has had with the 500 in the US market. And the Mini does not disprove the rule either – it might be rated as a sub-compact due to it being a tight fit inside but it’s neither small nor cheap.
But back to Volkswagen, the new best friend of the rapidly rising number of Americans who seem to want fuel efficiency, room for all their stuff and a VW badge on the trunk. It can seem amazing to we in Europe that some 150,000 people in the US bought a Jetta last year but there again, our car is far pricier. That total, by the way, is just the sedan, sales of which were up by 54.5% in 2011.
Big for its class, the Jetta has found a sweet spot above the Corolla, Cruze, Civic, Focus and Elantra, sitting as it does between the Compact and Mid Sized segments. The new Passat, is, meanwhile, a giant for its own class. It might even be too large – witness its still slow sales ramp up – only 6,884 found owners in December, roughly half the Jetta sedan’s monthly tally and barely a fifth of the level of the Toyota Camry.
So having unintentionally pricked the all-American Passat’s bubble (and to be fair, this car is still finding its feet – VW has neither the dealer outlets nor the marketing reach of Chevrolet, Ford, Toyota, Honda or Hyundai), I should point out that VW’s real new USP is its TDI-branded diesel models.
The Jetta sedan is leading the charge to the smelly-handled gas station pumps but as Passat sales rise in 2012, VW of America’s rivals will be watching closely. It will be interesting to see if the Passat TDI outsells the Camry Hybrid, for example, especially as gasoline-electric vehicles with a sole occupant are no longer eligible for California’s jam-busting carpool lanes. Anyone else noticing what’s happened to US market Prius sales since that law started being enforced a few months back?
VW quotes 21.6 percent as the share of its sales made up by so-called ‘Clean Diesel’ TDI-engined vehicles. Brand registrations shot up by over a quarter to 324,402 cars and light trucks in 2011, translating into more than 70,000 diesel-engined vehicles. That’s not only good business but with GM the only rival to have announced plans for a mainstream diesel model (the Cruze, and not until 2013), VW looks set to rule the roost in 2012 again. The division is maintaining its sales goal of 800,000 vehicles for the US market by 2018, too, which means annual registrations of TDI-engined Volkswagens are scheduled to triple, assuming a hypothetical constant of that 21.6%.
If the price of gasoline rises to a new tipping point with consumers throughout 2012, as well it might, VW of America could easily retail over 100,000 diesel vehicles by year-end. Audi too is quietly pushing selected TDI-engined models, as are both Mercedes-Benz and BMW – all continue to have high-margin successes from their SUV and crossover line-ups in particular.
And the last word on this fuel having so obviously now broken through in the minds of a sizable minority of US consumers? Another VW division, which also happens to be the industry’s most profitable manufacturer, has decided the time is right to launch a diesel SUV in America. How the world changes.
*US market sales of the Yaris totalled 32,704 in 2011, down 19% YoY
**US market sales of the Fit totalled 59,235 in 2011, up 9% YoY
