Chip woes may push VW Taos over Tiguan

Bucking conventional thinking, Volkswagen of America will likely prioritize production of its new Taos compact crossover over the larger, more expensive freshened Tiguan if microchip shortages get worse later in the year, says a top official with the automaker.

The reason might be a past experience.

After suffering a disrupted launch of the Atlas Cross Sport midsize crossover last year because of COVID-19, VW wants to make sure its introduction of the 2022 Taos is uninterrupted, explained Hein Schafer, senior vice president of product and strategy for Volkswagen Group of America.

"I think what's going to end up happening is that if the chip shortage does come and it hits us hard in [the third or fourth quarter], the one that's probably going to suffer the most is probably Tiguan because hopefully we get sufficient chips to at least get Taos off to a fairly decent start," Schafer told Automotive News this month.

VW launched the Atlas Cross Sport, a five-seat version of its three-row Atlas, in March 2020 just as COVID-19 shutdowns rocked the industry. The vehicle's marketing plan was scrubbed as its factory in Chattanooga was shut down for nearly two months.

The Taos, assembled at VW's massive plant in Puebla, Mexico, is expected to begin arriving at U.S. dealerships within the next several weeks. The Taos is the latest piece of VW of America's strategy to double up its offerings in hot product segments such as compact crossovers, where it will join the larger, more expensive Tiguan. The Tiguan is the brand's bestselling vehicle globally, and it has been the top seller in the U.S. since 2018. It is also built in Puebla.

The Tiguan has been freshened for the 2022 model year, adding safety and technology upgrades as well as getting new styling cues to separate it further from the Taos, which is expected to be at least $2,500 cheaper.

While most automakers would prioritize the larger, more profitable vehicle, Schafer said it's important that there are enough Taos crossovers on dealership lots for consumers to find the vehicle as it is being marketed. The brand will also have to balance keeping its plants in Puebla and Chattanooga running if supplier shortages get worse.

"So far, we've built a couple, so it seems like we should at least get the Taos launch out of the way. But that decision obviously needs to be made when we realize how bad and how dire the situation becomes, what we need to get to Chattanooga for Atlas and [Atlas] Cross Sport," Schafer said.

When it does begin arriving in the fall — assuming there are sufficient microchips — the 2022 Tiguan will aim to more closely take on high-flying competitors such as the Toyota RAV4, the fourth-bestselling vehicle in the U.S., and the Honda CR-V, the fifth.

The freshened Tiguan will feature a standard 8-inch instrument cluster screen, with a 10-inch screen available on top trims; VW's improved MIB3 infotainment system on mid- and upper-level trims; and heated front seats. The automaker also installed haptic response controls on the steering wheel and new digital HVAC slider controls in the cabin, along with configurable LED mood lighting.

The brand's IQ.Drive driver-assistance suite — which offers automated emergency braking, forward-collision warning, blind-spot monitoring, lane-keeping, adaptive cruise control and other safety functions — comes standard on all but the base model.

The exterior features a restyled front fascia that highlights the brand's redesigned logo and an optional lighted accent strip across the grille. Each of the Tiguan's four trim levels will receive newly designed aluminum wheels, from 17 to 20 inches.

VW reported selling 27,265 Tiguans in the U.S. in the first quarter, up 23 percent from a year earlier. In 2020, the Tiguan was the only VW nameplate to crack 100,000 sales in the U.S., at 100,705, down 8.4 percent.