DETROIT (Bloomberg) -- Volkswagen AG CEO Martin Winterkorn will explain today how he plans to return VW's U.S. unit to profit as it heads for an eighth annual loss. He'll do so without a leader to oversee the turnaround.
The CEO hasn't named a permanent successor to U.S. chief Stefan Jacoby almost a month after the VW veteran stepped down. Jacoby's exit coincides with the final phase of introducing a new Jetta compact, VW's best-selling American model, and as VW prepares to open a factory in Tennessee and present the first car built for the U.S. market.
Winterkorn, who will discuss VW's electric-car strategy in California and test drive the Jetta, has pledged to almost triple VW's share of the second-biggest auto market to 6 percent by 2018 and boost deliveries to 1 million cars, including the Audi luxury unit. U.S. progress will be vital for VW to reach its goal of surpassing Toyota Motor Corp. in sales and profitability, said IHS Global Insight Inc.'s Rebecca Lindland.
“The timing is anything but ideal for VW to lose its leader,” said Lindland, an analyst at the Lexington, Massachusetts,-based researcher. “Jacoby's departure will definitely be disruptive.”
Winterkorn, 63, is banking on localization of models and giving up the VW's premium-pricing strategy in the U.S. to better compete with small-car leaders Toyota Motor Corp. and Honda Motor Co.
The new Jetta, VW's first model altered specifically for the U.S. market, is 3.5 inches (89mm) longer than the European version. VW is targeting annual deliveries of more than 100,000, with the model going on sale in October, according to Mark Barnes, interim chief of the VW brand in the United States.
VW cut the extended Jetta's price to about $16,000 from the current base of $17,735. The reduction brings it closer to the starting prices of Toyota's Corolla and Honda's Civic, now $15,450 and $15,455 respectively, according to company Web sites.
The price cut is “a distinct change” from the past when VW kept a U.S. pricing premium of as much as 10 percent, said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen, Germany.
In a July 16 interview VW's Barnes said: “The new Jetta will be a very nice volume product for us. The goal is to bring the masses to Volkswagen who currently believe they cannot afford a Volkswagen.”
In the first six months, VW boosted U.S. deliveries by 30 percent to 126,000. Jetta sales increased 19 percent to 55,258 cars, accounting for 44 percent of the total. Other models that posted gains included the Tiguan, Passat CC and Rabbit (Golf).
Jacoby's successor will have to capitalize on the $1 billion plant in Chattanooga, Tennessee, scheduled to begin production in the third quarter of next year, and lift sales by designing more models for the United States, said Juergen Pieper, an analyst at Bankhaus Metzler in Frankfurt who recommends buying VW stock.