VW Tries to Steer Away from Costly Past Errors

Article excerpt

You really have to wonder what Volkswagen AG's move to the Washington, D.C., area from suburban Detroit -- billed as a fresh start in the United States for Europe's biggest automaker -- possibly can fix.

This is the same automaker, after all, whose German brain trust managed to negate America's love affair with the plucky Beetle by embarking on a series of blunders that turned VW into a struggling brand.

From a peak of 570,000 U.S. sales in 1970, VW might sell only about 350,000 vehicles this year, including 100,000 Audis. These are slim pickings in a market where about 16 million new vehicles are sold each year.

"We either missed or were late to the party for some pretty big volume segments,'' said Steve Keyes, VW's spokesman in the Detroit suburb of Auburn Hills. The company said Sept. 6 that it will start moving into new quarters in April in Herndon, Va.

In contrast to VW's bumbling in the United States, the automaker has posted strong results throughout Europe, Asia and South America.

To understand the roots of VW's difficulties in the United States, let's start with the Rabbit -- a small, rust-prone fuel- saver that enjoyed brief popularity in the 1970s, when the nation was frightened of gasoline shortages. The end of the gas crisis doomed the Rabbit, produced at VW's assembly plant in East Huntingdon, and then the plant itself.

VW, which enjoyed cult status with its Microbus, somehow couldn't figure out how to capitalize on the enthusiasm of American consumers for minivans, such as the one Chrysler built in the 1980s. …