VW replaces Browning as U.S. boss with company veteran

Browning: Leaving for personal reasons.
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DETROIT -- Volkswagen is replacing Jonathan Browning, head of its North American operations, with Michael Horn, a company veteran who currently leads the automaker's global aftersales operations.

Browning's departure caps a year of struggle for VW Group in the United States.

Browning, an Englishman who joined VW in 2010, is leaving the company for personal reasons and is returning to the UK, VW said.

Horn, 51, will take over for Browning, 54, as president and CEO of the company’s U.S. arm on Jan. 1, VW said on Thursday. Horn joined VW in 1990 and has been head of Volkswagen global aftersales since 2009.

Browning steered the U.S. unit to a 23 percent sales gain in 2011 and a 30 percent advance in 2012. The VW brand alone sold nearly 440,000 units in 2012, up 35 percent and twice what it had sold three years earlier, putting it on pace to meet its sales goal of 800,000 units in 2018.

But through November this year, sales of VW, Audi, Porsche and Bentley models are up 1 percent in a market that’s risen 8 percent, turning one of the fastest growing brands in the U.S. market into one of the few that is losing ground. VW-brand sales are off 5 percent.

Sales of the namesake VW brand have fallen eight straight months, partly due to a lack of new products -- particularly in the compact and mid-sized SUV segments, where VW’s existing offerings tend to be more expensive than the competition.

It has put substantial pressure on Browning, who has insisted that sales will recover once a new wave of products arrives.

VW said the progress made over the past several years gives the automaker a much stronger platform in the U.S. market. “This is an opportune time to implement these changes in our leadership structure as the brand is between major product launches and is preparing for the next phase of growth for the VW brand in the U.S.,” VW said on Thursday in a letter to U.S. dealers that was obtained by Automotive News Europe sister publication Automotive News.

Volkswagen Group has set a goal of selling 800,000 VW-brand vehicles in the United States by 2018, built around four models designed for U.S. customers: a compact sedan, a mid-sized sedan, a compact SUV and a mid-sized SUV.

Two of those models -- the redesigned Jetta compact sedan and Passat mid-sized sedan -- are on the market and selling far better than their predecessors. Delivering the SUVs will be one of Horn’s prime directives.

Michael Horn

Horn’s background pleases U.S. dealers such as Alan Brown, a VW dealer in Texas and a member of the brand’s U.S. dealer council. He said he thinks Browning has done a commendable job as CEO, but having a German like Horn leading the organization could now help U.S. executives make a case for SUVs and other new products.

“Volkswagen [Group] has a hard time releasing the reins to Volkswagen in America. There’s no secret there,” Brown said. “I think that with Browning being replaced by a German colleague -- that might give us a stronger voice.”

Horn has a background developing products. Earlier in this career, he helped to launch the VW brand’s Phaeton luxury sedan and Touareg luxury SUV, the latter of which has become a mainstay of the VW lineup in the United States.

U.S. struggles

Browning has also struggled to quell dissatisfaction this year among VW dealers, whose profit margins have shrunk as sales have declined and the automaker has made more demands to improve customer satisfaction.

The VW brand also has not managed to use the full capacity of a $1 billion assembly plant that opened in Chattanooga in 2011. In April, after it became clear the Passat sedan was not selling well enough to use the plant’s full capacity of 180,000 cars per year, VW switched from three teams to two, laying off 500 contract workers.

Through November, Passat sales in the United States have fallen 2 percent to 100,398.

Browning and other U.S. executives have asked to upgrade the assembly line at the Chattanooga plant, boosting its capacity to about 250,000 units per year. That would make enough room to build a mid-sized SUV similar to the CrossBlue concept shown at the Detroit auto show earlier this year. It would provide VW with a competitor to larger SUVs like the Ford Explorer and Toyota Highlander.

VW has said it will make a decision by year’s end, but no decision has been announced. Dealers are tired of waiting.

Before joining VW, Browning worked for General Motors and Ford Motor, rising to GM's head of global sales and marketing. His career has included stints as head of GM's Vauxhall unit and GM Europe's sales and marketing. He was also Ford of Europe's marketing boss and managing director of Jaguar Cars.

You can reach Gabe Nelson at gnelson@crain.com.

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