Volkswagen CEO Jacoby upbeat about U.S. growth

HERNDON, Va. -- Volkswagen of America wasn't among the automakers that benefited most from the federal "cash-for-clunkers" program, but the German automaker did sell out of its 2009 diesel models, most notably the Jetta TDI, as customers traded in gas guzzlers for federal rebates.

That may be a small accomplishment, given the 700,000 cars sold overall, but CEO Stefan Jacoby says he's now ready to tackle some bigger things. He said Wednesday that he plans to make VW's U.S. operations profitable and its cars "mainstream," and to overtake Toyota in sales and profitability.

The idea of a plain-vanilla VW is heretical to the German automaker's loyal fan base, but VW's marketing folks insist they can maintain the emotional attachment their buyers have while overcoming what they acknowledge is their "essential irrelevance" to everyone else.

Christoph Stuermer, an auto industry analyst for economic research and consulting firm IHS Global Insight, says VW has been on the "lucky side of the (economic) crisis," buoyed because they have such a small market share here and sell so many vehicles in China, which is still growing.

"Operationally, they made a profit, which is absolutely amazing when you look at how much the rest of the industry is hurting," Stuermer says.

The U.S. market has been another story. Plagued by low brand recognition and a reputation for high-maintenance cars, VW has struggled to improve market share. To speed the plan along, the company will overhaul all its models — except the Eos but including the long overdue Beetle — by 201l. That year, VW will begin to launch vehicles that are made here for the U.S. consumer with a goal of 85% local parts.

"They must get it right," Stuermer says.

Trends are pointing in that direction. The number of warranty claims is down 50% in three years, Jacoby says. Their customer loyalty numbers and quality ratings have improved, although Jacoby attributes much of that to "perception."