Volkswagen has a problem. The most premium of middle-range brands is under assault from the best of the lower-range brands - its own Skoda and Seat nameplates.
A weak German market hasn't helped the Volkswagen brand. Neither has the fact that there are no new VW models this year. Furthermore, customer deliveries were soaring in early 1999 as VW worked to catch up with a flood of orders in late 1998. So Volkswagen looks worse in year-on-year comparisons.
Strong exports to the USA and elsewhere have kept the plants in Wolfsburg humming even as German sales have declined. But VW must address a real problem. It is not doing enough to differentiate its Volkswagen cars from other models in the group.
Ferdinand Piëch's famous platform strategy is not working. Or else it is working all too well.
The group needs more contrast between brands. Piech may be trying to achieve that. He has set ambitious positioning targets for the Czech and Spanish brands.
But Skoda has not yet reached Volvo status and Seat has not quite become Alfa Romeo. They may be on their way, but they must pass through Volkswagen market territory first and they are brushing dangerously close to the main brand. The result has been cannibalization instead of conquest.
Piëch is trying to create the kind of variety in his portfolio that Wolfgang Reitzle inherited at Ford's Premier luxury-car group - a wealth of distinctiveness. But it will take a generation or two of new models to manage that and VW will have to deal with the marketing consequences in the meantime.
For now, Skoda is Europe's great-value car. Buyers are wise to the fact that the aggressively priced Octavia is not far behind the Golf in content and quality.
Meanwhile, VW no longer brags about how few platforms it has. In fact, the first into the platform strategy is in some ways becoming the first to back out. It is developing original, non-shared platforms for new specialty cars like the high-luxury VW D1.
The sales decline has cost VW brand sales boss Hans-Ulrich Sachs his job. Sachs may have had other faults. He never quite fit in during his 10 months in Wolfsburg.
But VW's problems go beyond one executive. It needs to put more effort into brand management, not just in moving the metal.
If not, the great effort that has gone into engineering excellence will be wasted.