VW finally get's pricing right??? (sort of)...

[TechnoTrix'd]

Check out this short story on MotorTrader.com. It talks about how VW (Europe) is hurting the volume sales leaders with new pricing models.

http://www.motortrader.com/25047/Volkswagen-hurts-volume-brands.ehtml

In the story, the UK VW Boss admits that the new Golf (MkV) was priced too high when it was introduced.

So, does this mean that VWoA will follow suit?

TechnoTrix'd...

[silverspeedbuggy]

VW has admitted the MKV Golf is too expensive and has been de-contenting it from the first year of production. Unfortunately the MKV is very expensive to produce and VW has already been hard at developing the MKVI to get into showrooms faster than their typical model cycle. A MKVI test mule was spotted hot weather testing not too long ago, so the "new" Golf should be revealed in the next year or so. The MKVI Golf will not be all new, merely a highly revised version of the current Golf with new styling and a high focus on reducing manufacturing and production costs.

Interestingly enough, VW sells the Golf here (as the Rabbit of course) for less than the cost to produce them. They lose money on every single one of them. The theory is that:
- the low price will bring buyers into the showroom and perhaps a more luxurious Jetta will attract them
- a VW sale is a VW sale: yes, we may lose money on the sale, but the buyer didn't buy a Honda, or a Toyota, or anything else

[wawalker]

Originally Posted by silverspeedbuggy

... VW sells the Golf here (as the Rabbit of course) for less than the cost to produce them. They lose money on every single one of them. The theory is that:
- the low price will bring buyers into the showroom and perhaps a more luxurious Jetta will attract them
- a VW sale is a VW sale: yes, we may lose money on the sale, but the buyer didn't buy a Honda, or a Toyota, or anything else

I believe you Chris, but isn't that stupid? I understand "loss leaders" at a grocery store where they lose money on staple items like flour, tomato paste, cans of tuna, etc., because people walk out with so many other items anyway and the theory is they came in because of your best price beat the other store on those few staple items. I have only bought 2 brand new cars my entire life--if I bought a Rabbit today, I probably won't buy another new car for several years and I'd say that is typical. How do they expect to stay in business? Will we get the Mk. 6 when Europe does? or will they make us wait as before while losing money on every car? I just don't get it.

[silverspeedbuggy]

I think I heard/read VW is working hard to introduce cars here as close to their Europe launch date as possible. In the case of the MKV Jetta we actually got it first, then the Europeans got em not long after. I think the upcoing Tiguan will be introduced here very very shortly (like a month or two) after Europe. I could be wrong though.

I regards to loss-leaders, I agree, it doesn't make sense. But put yourself in VW's shoes:
1. Do we offer the Golf (Rabbit) here and charge the appropriate price? Will Americans pay $20K (my estimated figure) for a base model Golf? Will these cars end up sitting on dealer lots for months/years since no one will pay this much for an entry-level car?
2. Do we not offer the Golf at all and risk those buyers going to our competitors? Say a first-time car buyer loves VWs, but can't afford the Jetta (or wants something smaller), they might be forced to go to Honda/Toyota/Hyundai and we might never "get them back" even if it is 6 years from now.
3. Do we cut our losses, sell the Golf at prices they will sell for and then target the next model for cost-cutting?

It's a tough gamble.

We've gotten a little off-topic, so I'll bring things back in line and put my $.02 out there:
I don't think we'll suddenly see the average price for a new VW drop drastically even with the cost cutting measures they are looking into. I could see VW really looking at the features and benefits the base level cars offer and perhaps balance out things a bit so the lower priced models appear to offer more features. Or perhaps they will offer a more base model with less creature comforts so that buyers upgrade to the more expensive models.

[wawalker]

Originally Posted by silverspeedbuggy

I think I heard/read VW is working hard to introduce cars here as close to their Europe launch date as possible. In the case of the MKV Jetta we actually got it first, then the Europeans got em not long after. ...

I hope they do. As for the Mk.5 Jetta, we got them first because we buy them--Europe prefers the hatchback Golf and Jettas aren't big sellers there. They got the Mk.5 Golf/Rabbit about 2 years before we got it here. I prefer the Golf only because I can't get a 2 door Jetta.

As far as the marketing gamble: my understanding is the Mk.4 Golf is still being made, a Canadian member here bought one recently--they call it the "City Golf". Why not decontent that car as the entry level vehicle--just offer air, automatic, sound systems as options--I'm sure that could be very cheap and still make money or at least break even.