CEO Profile: VW exec brings plans to U.S.; see video Q&A

HERNDON, Va. -- This story was originally published on July 28, 2008.

Stefan Jacoby's suits appeared to be shrinking after he moved to this country from Germany in the fall. He blamed the dry cleaners. But after his wife arrived here in March, she let him in on a secret: He was eating too much.

Steaks, Italian, Asian food — the new CEO of Volkswagen of America took it all in, much as he's now immersing himself in American culture.

A trim man with a playful twinkle in his eye, Jacoby is a self-described "non-German German." His aides say that refers to his international upbringing — his father was in the German Air Force, and he traveled a lot as a child — and to his eager embrace of the USA. He's so quick to laughter and lightheartedness that Jacoby cuts a stark contrast to any stereotypes of "very, very businesslike" German auto officials, says COO Mark Barnes.

To prove that his company's diesels are clean, Jacoby takes a tissue, holds it over the exhaust pipe of a 2009 Jetta TDI while the car is running and displays the still-white tissue to a reporter. Then, with deft comedic timing, he blows his nose with it.

To underscore the appeal of his brand, he notes that after he bought a Beetle in college in 1974, "From that day on, I had much better success with girls."

A whimsical sense of humor

During an eight-hour, 20-mph trip in a driving snowstorm last winter, Jacoby kept Barnes and a PR aide laughing with vows to find Elvis in the storm.

"He is very witty," says Automotive News publisher Keith Crain.

Like his brand, though, Jacoby will need more than personality to succeed in the U.S. market at a grim moment for automakers. Though Volkswagen commands loyalty among its fans in this country, it remains a niche brand, with only 2% of the U.S. market, according to Autodata. That puts it well behind U.S. brands and all major Japanese brands and is only half the share of of South Korea's Hyundai.

With new car sales down more than 10% for the first six months of the year and consumers increasingly focused on fuel economy, price and quality, VW's often-higher prices, and lingering doubts about reliability, can work against it. It's responding by rushing more diesel models, including the Jetta and a new Touareg, to market for consumers worried about gas prices.

Still, some consumers, such as Paul Fowler of Carmel, Ind., say the diesels have taken too long: "Many Americans would love to be driving Jettas that get 45 mpg," he says. Others say high diesel prices will temper demand, even though diesels get better mileage per gallon. Jacoby is determined to reverse those views.

Reaching out

To that end, he's reached out personally to dealers and customers. Since fall, he's visited about 50 dealers at their stores and met with at least 50 other dealers in national meetings. He talks with customers in showrooms and will ask waiters what they're looking for in a car. The reception to a man some dealers see as an almost mirror image of his predecessors has so far been encouraging.

"In the past, some people in management were stubborn," says Gary Montesi, a Connecticut VW dealer. "The attitude was, 'We know what your country is all about,' to which dealers would say, 'No, you don't. We do, and we live here.' "

With Jacoby, Montesi says, "It's a refreshing change."

To help smooth VW's glide to a more American-savvy car company, Jacoby announced this month that Volkswagen had chosen Chattanooga for its first U.S. assembly plant since the last one closed 20 years ago. It will employ about 2,000 and make a new, as-yet-unnamed, midsize sedan.

Now at the helm of the carmaker that's employed him almost continuously since he graduated from college (he did a two-year stint at Mitsubishi starting in 2001), Jacoby clearly relishes the site of the U.S. headquarters here, just outside Washington. It opened in April after the company moved from Auburn Hills, Mich.

He loves that an old Beetle, much like the one he owned in college, has been hoisted up to the sixth-floor lobby of the under-construction building. And while many would chafe at the traffic between the $2.6 million, 110-year-old townhouse he now calls home in Georgetown and his office near Dulles International Airport, Jacoby loves the drive. Drivers here, he says, "are over-reacting to the traffic."

After all, he's seen far worse in Asia and Russia.

One thing about his new country that Jacoby does dislike is its comparatively low speed limits. Plans for a reporter to go for a drive with Jacoby led to jokes around the office that he'd go far too fast. (The drive was scuttled due to scheduling conflicts.)

And while he willingly steered toward a McDonald's and scarfed down a Big Mac Super Meal on his snowy Chicago-to-Detroit drive earlier this year ("He wanted to see what it was like to be an American," Barnes says), Jacoby also now counts the prevalence of fast-food eateries as the only other thing he isn't fond of here.

He wasn't always a car guy. Few people in Germany were when Jacoby was growing up. When he was a boy in Hanover, the family's first car was a 1964 Beetle. Back then, after World War II, a Volkswagen meant "very hard work" to afford one, unlike the fond memories of a quirky car that many U.S. buyers associate with their family's Beetles.

By the time he enrolled at the University of Cologne in 1974, Jacoby well understood the appeal of the automobile. He saved hard to buy his 10-year-old Bug. "My life changed with a black Beetle convertible," he says. He became "addicted" to cars.

"It's a passionate product," Jacoby says. "You can always talk about cars. It's maybe the most complex and technology-driven good sold worldwide."

Setting sales goals

Jacoby's job now is to convince several hundred thousand more people that they can invigorate their lives with the addition of a VW. He's set a goal to more than triple the brand's annual sales, from 230,000 a year to 800,000, within 10 years.

Crain is a bit skeptical. But he concedes that "a consistent marketing message," unlike the safety-minded Volkswagen crash-test ads that he says flopped a few years ago, would go a long way toward getting him there. Accordingly, Jacoby has installed Barnes and the company's vice presidents of marketing and product on a team that Barnes says wouldn't exist at most automakers, because "normally the sales guy is the sore thumb."

Jacoby hopes to promote the brand's improved models to spread the devotion that its still relatively few U.S. customers seem to have for his brand. When he met with members of Washington's Major League Soccer team, D.C. United, after signing a deal to sponsor the team, players regaled him with stories about their early memories of Beetles.

Goalkeeper Zach Wells told him of the time, when he was 4, that he released the hand brake on his parents' VW and rolled it into the street. Team CEO David Payne said he wrecked a 1960s-era Beetle that his brother had almost totaled years earlier.

The company, Jacoby says, is grappling with how to deliver the quality and convenience Americans expect without compromising the cars' personalities and performance-oriented rides. It's improved its J.D. Power quality ratings but still trails many rivals. Told that some USA TODAY readers have said they worry that VW might soften the car's ride to serve more typically American tastes, Jacoby jokes that he's "worried about this as well."

But then he adds: "I promise you I know exactly what they mean, and our cars will always remain a VW. Against mainstream American and Japanese cars, our cars are really fun to drive."

With former posts that spanned the globe, Jacoby's happy to be in a place that involves a bit less travel. He still travels often to Germany, and he visited Africa this month for 118-degree, hot-weather vehicle testing. Still, it's better than when he flew so much it felt like his home was "Lufthansa seat 4A."

"He really wants to embrace the U.S. lifestyle and the U.S. market," Barnes says. "It's not like he's saying, 'They sent me to the U.S., so I'll act like I'm enjoying it.' If he didn't, he couldn't put this front on."