After months of anticipation, Volkswagen has taken the wraps off its new midsize sedan for the U.S. market at the Detroit auto show. The new model, which takes the name of VW's existing midsize entry, Passat, is more than just a fresh design. The vehicle brings with it a commitment by the German automaker to resume building cars in the U.S. for the first time in decades.
The Passat, which will begin hitting dealer showrooms later this year, will be made in Chattanooga, Tenn., where VW (VLKAY) has invested $1 billion in a new plant. As with the newly redesigned Jetta compact that was introduced last fall, the new Passat is specific to the U.S. market, as the company seeks to expand U.S. sales in its bid to supplant Toyota Motor (TM) as the world's largest automaker by 2018.
Volkswagen has a long way to go, however, to achieve that goal. Toyota sold more than 1.76 million cars last year in the U.S., despite being besieged by numerous recalls that led many consumers to consider other brands. By contrast, VW reported earlier this month that it sold about 257,000 cars in the U.S. in 2010.
Those familiar with the design of the Jetta will see a strong resemblance in the new Passat with its sweeping, albeit conservative, lines, and familiar headlamp and tail lights themes. As was the case with the Jetta, the new Passat is larger than the model it replaces, in keeping with Americans' desire for larger vehicles.
German Engineering in an American-Made Car
"Accessible German engineering in the midsize segment" is how Toscan Bennett, a VW of America marketing executive, described the Passat in a telephone interview with The New York Times ahead of the car's unveiling. When equipped with a 2.5-liter five-cylinder engine, the new Passat will cost around $20,000, about $7,000 less than the current Passat. A diesel engine version, capable of up to 43 mpg, and a V6 model will also be offered.
Despite its ambitions, which include an overall $4 billion investment in the U.S. market, VW has much work to do to woo quality-conscious consumers. Volkswagen finished near the bottom of all carmakers in the latest survey of new-car initial quality, by J.D. Power and Associates.
Further, the newly introduced Jetta hasn't been a smash hit with reviewers. Consumer Reports, considered one of the most influential guides for U.S. car buyers, gave it only mixed reviews. Whether the Passat will fair better remains to be seen -- especially since it's competing in one of the most crowded and competitive segments of the market. Rivals include the Toyota Camry, General Motor's (GM) Chevrolet Malibu and Honda Motor's (HMC) Accord.
And even if VW does sell more Passats then it has previously, it remains unclear to some experts why the company seeks to become the world's largest automaker.
"It hasn't worked out so well for the last two companies that were No. 1," Aaron Bragman, analyst with IHS Automotive, told the Detroit Free Press, referring to GM and Toyota's recent struggles. "Wanting to be the biggest just to be the biggest, I don't understand that."
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