VW's U.S. sales gains on track to erase losses from emissions scandal

Volkswagen's long-term dream is to return to its glory days from 50 years ago, when the German mass-market brand sold more than half a million vehicles in the U.S. and commanded a share as high as 5.8 percent.

But on the way to that lofty goal, a few hurdles remain — including one that the brand is on pace to clear this year.

Volkswagen's U.S. sales were up 6.1 percent through July, to 215,796, while the industry as a whole is down an estimated 1.6 percent, according to reported results and estimates compiled by the Automotive News Data Center.

If its sales trend continues, including August results due this week, Volkswagen will be on track to top its U.S. sales for 2014 — the year before its costly diesel emissions scandal, when it sold 366,970 vehicles in the U.S. In 2018, Volkswagen's U.S. sales totaled 354,064 vehicles.

Also helping dealers is the growth of Volkswagen's Certified Pre-Owned program, up 16 percent through July to 64,000 vehicles, after experiencing a 26 percent increase in 2018. The automaker's program was rebranded in April 2018 after years as Volkswagen WorldAuto Certified.

Despite its recent success, Volkswagen of America unexpectedly parted ways last month with Derrick Hatami, its executive vice president of sales and marketing, as well as Jim Zabel, the brand's senior vice president for marketing. Both departures were announced in a press release about the hiring of former Kia and Fiat Chrysler Automobiles executive Saad Chehab as Volkswagen's senior vice president of marketing. Hatami had been hired from Hyundai in 2017 by former Volkswagen of America CEO Heinrich Woebcken, and was in place when Woebcken was replaced last fall by Audi of America President Scott Keogh. Zabel had followed Hatami to Volkswagen from Hyundai.

John Luciano, chairman of the Volkswagen National Dealer Advisory Council, said dealers liked Hatami and enjoyed working with him. But Luciano said he understands Keogh wanting to pick his own head of sales.

"Scott's got just a yeoman's job ahead of him trying to run the U.S., Canada and Mexico, and he's got to have the people that he needs where he needs them," Luciano said. "The dealer body liked Derrick and thought he was very competent, but this is just the way things happen in a corporate world."

A spokesman for Volkswagen of America declined to comment on the reasons for the departures of Hatami and Zabel. But a person at the company familiar with the situation told Automotive News that the reasons involved Keogh "forming his team" and wanting VW to "grow faster than the market, so we needed to accelerate things."

Recovering from the sales hit caused by the 2015 diesel emissions scandal has been a milepost goal for Volkswagen of America for several years as it moves toward a 10-year goal of returning to a 5 percent market share in the U.S., more than double its current share.

The company plans to get there with the help of a reworked lineup full of crossovers, buttressed by at least four battery-electric vehicles.

Volkswagen has grown its sales this year in large part thanks to three nameplates: the Tiguan and Atlas crossovers and the redesigned Jetta sedan. Through July, Atlas sales had risen 31 percent from the same period a year earlier to 45,414, the Tiguan was up 4.7 percent to 66,299, while the Jetta has climbed 43 percent to 57,059.

"It's quite an accomplishment when you consider that the industry was on the upswing in 2014, heading toward the peak in 2016," said Michelle Krebs, executive analyst with Autotrader. "It can all be attributed to them having the right products in their lineup right now, putting the focus on sport-utility vehicles. It's not rocket science when you give the market what it wants."

July marked the sixth consecutive month that crossovers accounted for most of Volkswagen's U.S. sales. As recently as 2014, crossovers accounted for less than 10 percent of the brand's U.S. sales.

The brand will also introduce a two-row version of the Atlas next year, called the Atlas Cross Sport, and an unnamed subcompact crossover slotted below the Tiguan. It is expected to be similar in size and features to the VW Tarek, sold in South America. It is to be built in Puebla, Mexico, and is expected to arrive in the U.S. in 2021.