VOLKSWAGEN AG’s US sales rose 6.3 percent last month, less than rivals’ but better than analysts expected, in a sign of how consumers are reacting to the automaker’s cheating on diesel emissions tests. VW, which boosted incentives to above the industry average, didn’t give results for its diesels, including the 2-liter models that were pulled from lots.
Sales rose 0.6 percent for its namesake brand and 16 percent for the Audi luxury unit, the company said on Thursday. Four analysts in a Bloomberg survey had split evenly on whether the combined total would rise or fall, with an average estimate of a 0.8-percent gain, the lowest for any major automaker. For the Volkswagen brand alone, the average of three estimates was for a 6.- percent slide.
“We would like to thank dealers and customers for the support of the Volkswagen brand,” said Mark McNabb, COO for Volkswagen of America. “Volkswagen will continue to work diligently to regain trust and confidence in our brand.”
The company’s marketing promotions per vehicle jumped $479, or 17 percent, to $3,381, according to an analysis by Autodata Corp., which said the industry average rose 5.7 percent to $3,144.
The Volkswagen brand, down 2.5 percent through September, has been lagging, while America’s love of pickups and SUVs, fueled by available credit, affordable fuel and the latest technology, helped push auto sales to the highest level in more than a decade. Audi, with a 13-percent increase through nine months, has been benefiting from a surge in demand for luxury vehicles.
Volkswagen brand deliveries in September increased to 26,141, led by a 51-percent surge for its Golf models. Audi sales rose to 17,340, the brand’s best September in the US. The compact A3 was the line’s only model that is sometimes equipped with the 2-liter diesel engine implicated by the cheating. A3 sales rose 16 percent.
Combined sales for the two brands were 43,481, up from 40,913 a year earlier.
Holiday effect
Analysts said Volkswagen, like other automakers, may have been helped last month by the Labor Day weekend, a traditional car-shopping holiday, falling in September this year after occurring in August the previous year.
The US industry may show a 13-percent jump in September car and light-truck deliveries, for an annualized rate, adjusted for seasonal trends, of 17.7 million, the average of 12 analyst estimates in the Bloomberg survey.
Volkswagen is the subject of numerous government investigations and lawsuits since the US Environmental Protection Agency said on September 18 that the largest European automaker admitted using a so-called defeat device that turned off emissions controls when vehicles weren’t being put through official tests. The revelation undermined VW’s diesels, which were one of its few strengths, along with a critically acclaimed line of Golf cars. Martin Winterkorn stepped down from his role as chief executive officer of the automaker, but remains CEO of its largest shareholder.
Customer interest
Alan Brown, who runs the nation’s largest Volkswagen store, said earlier this week that customers at his Hendrick VW haven’t stopped asking about the cars. Even with 22 percent of his 237-vehicle inventory now quarantined, his team last weekend sold six new vehicles and handled questions from customers who like the diesels, wanted to know when they’d be available and wondered what kind of discounts they’d soon carry.
“People are smelling a little blood in the water,” said Brown, general manager of the store in Frisco, Texas, near Dallas. “The hope is the factory decides to give a little back to the community in the form of incentives. I think they will, and I think we come out of this stronger.”
VW’s US sales have dropped for two straight years, hurt by an aging lineup that lacks a mid-size SUV. To try to more than double US sales and meet a 800,000-vehicle sales goal by 2018, the automaker has relied on leasing to ensure a stream of repeat customers when their contracts end in 2017—about the same time the fruits of its product-line reformation would hit dealers.
Leases, some as cheap as $39 or $49 a month, have accounted for about 40 percent of the company’s deliveries—more than Porsche and about double the rate of most mainstream brands.
Diesel demand
Volkswagen had been getting some help from interest in diesel vehicles, which have gained sales in the US for eight straight years. Though Baum & Associates figures show Americans buy more than three times as many hybrids and electric models as diesels, hybrid sales have been slowing and actually slipped last year as gasoline prices fell.
Shoppers predisposed toward diesels are more likely to delay a purchase, if possible, than to choose an electric vehicle or a hybrid instead, Jeff Schuster, senior vice president at LMC Automotive in Troy, Michigan, said in an interview.
“Those buyers share an interest in increased fuel economy, but that’s where it stops,” he said. “Those diesel buyers are going to be left hanging for a little bit.”
Brown, who heads VW’s national dealer council, said that while the scandal has slowed consumer demand for now, it hasn’t diminished the interest in diesels.
“The brand is working on incentives and how we’re going to face these headwinds in next few days,” Brown said. “VW has the funds to do it and do it right.”
