Sedans drive VW's growth strategy

Volkswagen recently ran a global campaign extolling driving efficiencies under the ‘Think Blue' theme. For its Middle East operations, green is proving just as dominant a colour theme. The German carmaker recorded a supercharged January in these markets with sales doubling over the same period last year. "Historically, January 2012 was the best month in the region," Stefan Mecha, managing director for the Middle East, said. The company is hoping that the strong start will continue well into the middle of the year, which is when its saloon brand, the Passat, shipped from the US will reach these markets. A lot is riding for Volkswagen on the ‘Made in the USA' stamp. Currently, only the Passat from the German plants is shipped to this region. What the upcoming US deliveries will offer is a degree of flexibility to price the model below the current Dh90,000 and above commanded by the German-made cars. Passat pricing "Pricing will be disclosed officially during the press launch of the car," Mecha said. "Our customers will be very excited about the competitiveness of this car in terms of price and affordable innovations. "We've already begun the production process [at the US plant] and the final launch date will be announced once we finalise shipping details. We are following a clear strategy for the sedan models — Jetta introduced last year, Passat this year, Polo [at the] end of the year. "We are also very proud of our new lifestyle model, the [Passat] CC, which is produced in Germany. Today the CC accounts for 15 per cent of total sales, and with the new Passat from the US, we believe that it has a huge potential and will account for 25 to 30 per cent of our sales. Currency fluctuations "With our cars being produced in the Americas — like the Jetta and Passat — currency fluctuations will not influence our prices at all." Apart from the Passat, there will also be the new Scirocco R and CC models this year. Following an exceptionally strong regional performance in 2011, the company will want to ensure that the momentum is sustained. This is why it has to get its line-up and pricing spot-on for its sedan models. "The [mid-tier] segment has always been highly competitive and very price sensitive," he added. "We have not observed any changes or increased incentives, yet we clearly see that the Jetta in particular is well-positioned price-wise and features that allow it to enjoy increasing customer acceptance. "Volkswagen has a clear strategy to grow the business in the Middle East — that has always been our goal." Models in demand Volkswagen recorded a 21 per cent growth in the Middle East during 2011, which was led by gains for the new Jetta launched last May. Also bolstering the line-up were the Golf R and Tiguan. Fleet sales also had a hand in last year's volumes, which included the first Volkswagen taxi fleet in Qatar through a collaboration with Mowasalat (Qatar Transport Company). The fleet business recorded sales growth of 20 per cent in these markets for the German brand.