Volkswagen is bleeding out.
The company once had grand hopes of becoming the largest automaker in the world but now finds itself struggling to dig out of a crippling emissions scandal that will likely cost tens of billions of dollars, not including pending litigation from consumer groups and the United States government.
Volkswagen’s marketing has turned toward promoting its turbo lineup and gas-powered SUVs and crossovers, but sales are in a spiral.
Recovering from this mess will take years, so maybe the time has come for VW to seriously consider abandoning the U.S. market. Here are some reasons why:
1. Volkswagen only has about two percent of the U.S. market and sales have fallen by about 13 percent over the first two months of 2016. Buyers would have plenty of other options without a VW presence here, and many are already taking those options.
2. If VW left the market, it would still need to maintain service departments here. Doing so would cost a fraction of recovering from the brand damage caused by the scandal. The company would still be on the hook for legal damages and penalties, but future marketing dollars could be spent elsewhere.
3. Volkswagen has larger market share in other countries. Leaving the United States would free up efforts to focus on European, Chinese, and South American markets.
4. Volkswagen dealers in the United States would most likely need to be compensated for the loss of their business, but again, cashing out the dealers would at least free Volkswagen from the headaches associated with continuing to fight the war of recovery in this market.
Volkswagen makes some great cars but there’s nothing in its stable that would be irreplaceable. Shopping for a Jetta? Get a Mazda3. Dreaming of a Passat? Look toward a Legacy.
Volkswagen had a far better value proposition when it sold “clean diesels,” but with those out of commission the company doesn’t have much left to stand on. No one could fault top executives if they chose to abandon the United States all together.
Would you miss Volkswagen if it pulled out of the U.S. market?
-tgriffith
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