A new report by Bernstein Research analyst Max Warburton says that Volkswagen’s U.S. operations will lose roughly one billion US dollars in 2014.
The report calls on VW to walk away from its goal to sell 800,000 VW brand vehicles by 2018, hire more dedicated U.S. management to better understand the American market, improve its product range, and develop a consistent marketing strategy.
“Ultimately, we believe VW can do better in the U.S. – but progress will be costly and slow,” said the report. “We fear VW’s U.S. losses are unlikely to moderate in 2015 – any meaningful improvement must likely wait until 2016 or 2017.”
For the first 11 months of 2014, the Volkswagen brand sold 332,911 units in the U.S., an 11 percent decrease over the same time period in 2013. The sales volume pales in comparison to those of rival mainstream brands like Ford, Chevrolet, and Toyota in the U.S.,which have sold 2.2 million, 1.8 million, and 1.8 million vehicles respectively, year-to-date November 2014. Though VW’s upcoming midsize SUV should help alleviate those issues, it is only a part of its comeback strategy.
The Bernstein report stated that though Audi, VW’s luxury division, is profitable in the United States, the VW Group as a whole is operating at a financial loss in America, and that it will lose between $995 million to $1.2 billion in the region in 2014. Those figures include some of the development costs of the upcoming midsize crossover, which will take cues from the CrossBlue concept.
Unfortunately, VW doesn’t report earnings results by region.