It’s well-known in the industry that the latest hottest trend is the small SUVs rising demand. Europe, Brazil, North America and Asia have all being touched by this boom which in some cases has offset the bad results coming from other segments. That’s how many automakers have joined the party by launching in most of the cases the SUV versions of their sub-compact cars. They know that many customers are moving from the traditional 5-door small hatchbacks to SUVs despite the fact that in most of the cases they won’t need the higher ground distance. The “SUV fever” began in North America with the large ones but soon Europeans and the emerging markets started to drive them as well. However the small SUVs birth place isn’t clear as some say that it was Ford that created it in Brazil with the EcoSport, while others indicate that it was Renault-Nissan the first to launch this kind of vehicles. The truth is that today 11 of the world’s 17 largest car makers offer a B-SUV in their range, and 4 more should do it in the coming years. VW Group is part of the existing offer thanks to the Skoda Yeti, but it still lacks of real competitive global B-SUV to face the increasing competition of the popular Renault Captur and Duster, Peugeot 2008, Honda HR-V, Jeep Renegade or Ford EcoSport. Why one of the world’s largest carmakers hasn’t played the game as expected?
Currently VW Group SUV range is composed by 8 different nameplates: 1 B-SUV, 2 C-SUVs, 2 D-SUVs and 3 E-SUVs. For comparison reasons, Jeep as a brand has 6 different nameplates.
The recent management crisis that took Ferdinand Piech out of the power, is just the tip of the iceberg of the problems VW AG has. The group’s decisions are extremely centralized in Germany and this certainly blocks the whole view when deciding whether to launch a new product or not. VW top managers just simply focus on other problems and sometimes they don’t consider the needs of specific markets. Brazil is one of the group’s key markets but recently the demand of new cars have dropped considerably. Although most of the carmakers operating there are having problems, VW seems to be more disconnected than the other leaders, FCA and GM. In USA the group hasn’t done anything yet to solve the bad image issues VW brand has and even if they already announced new SUVs for the coming years, the Volkswagen sedans and SUVs don’t follow overall trend. Chinese recent results indicate that the group is more vulnerable than it seems once again because of product issues. Russia and India are not sources of good news. At the end it seems that is only Europe where things are working for the strategy of the group, adding that it’s not making part of the hottest segment.
SUV demand has risen everywhere in Europe but at different speeds. Germany is the largest markey by volume, but both, SUVs and B-SUVs sales don’t advance as in the other major markets. It is even below Europe’s average. Source: JATO, bestsellingcarsblog.com, CCFA, KBA, UNRAE, ANIACAM
The centralized decision-making system may be one of the key reasons that explains the absence of VW from the B-SUV segment. Germany’s 2014 SUV sales posted the lowest increase among the 5 major markets in Europe, and was quite below Europe’s total. Germans don’t buy SUVs as French, Spanish, Italians and British. Even if it is the largest market, the SUVs counted for 18,2% of German car sales, while they had a larger share in the other European big 4. The gap with them is even larger when going into the detail by sub-segment: the B-SUVs accounted 23,22% of the SUV sales in Germany vs. 33,90% in Europe, 57,56% in France, 40,37% in Italy and around 32% in the UK and Spain. This pattern is also seen in other Northern European markets such as Sweden, Norway and Finland, and even in Switzerland. These numbers and the fact that VW’s decisions are strongly “Germanized” could explain the lack of interest the group has had for this kind of vehicles.
Last year the B-SUV sales registrations outpaced overall industry in many markets. It’s a global trend which is being properly used by many automakers. Source: JATO, Goodcarbadcar, FENABRAVE, Autoblog.com.ar, AMDA, bestsellingcarsblog.com
The B-SUV from VW Group hasn’t arrived yet because the car group is more focused on fixing other problems that could be closely related to the SUV segment. In other words, the Germans may be having problems now because of their lack of vision in terms of SUVs demand and this could be the cause of the sales drop in South America, the stagnation in USA and the recent alerts coming from China. It’s clear: VW and its brands are not competitive enough in the world’s fastest growing segment. Now the management focus is USA, the MQB platform, and how to deal with the red numbers in China. Meanwhile they announced new investments in Africa and South Asia, while they’re exploring the Iranian market. The coming Taigun, presented some years ago as a concept, and the new Audi Q1 won’t arrive before the end of 2016, and by that time there will be an all-new Nissan Juke, Dacia Duster, Mini Countryman, and GM, PSA and Renault will be preparing the new generations of their Mokka/Trax, 2008 and Captur. Too late?
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