Michael Horn, CEO of Volkswagen Group of America since January, says the new center in Chattanooga will address those shortcomings by adding manpower in two key areas: competitive analysis of the U.S. market and product planning.
VW engineers there will get a more in-depth, firsthand look at competitor vehicles by doing teardowns and analysis of component sourcing and cost. Currently, Volkswagen's U.S. analysis team looks at the competition from a marketing level: Who is offering what features on what vehicles, and what are they charging, Horn says.
The extra engineering manpower will also give Volkswagen more capacity to study new vehicle possibilities and derivatives of current vehicles that could boost U.S. sales volume. Product proposals will still be subject to the same review process in Germany. But crucially, Horn says, the new capabilities will help Volkswagen of America develop stronger business cases to justify investment from Wolfsburg in the vehicles they want.
Horn and his U.S. team will need the help if they are to break VW-brand's current free fall -- a 15-month streak of declining U.S. sales -- and get back on pace to meet the parent company's stated target of 800,000 U.S. sales a year by 2018, a goal Winterkorn reaffirmed last week.
For Volkswagen, a successful effort would help fill what remains a big hole in its global presence. Honda and Toyota took similar paths to prominence in the U.S. market, starting with factories and later shifting more product development and engineering duties from Japan, to the point that top-selling U.S. models like the Honda Accord and Toyota Camry are now largely conceived by American designers, engineers and product planners.
"If you can succeed in the U.S., you're truly a globally competitive company," said Brett Smith, co-director of the manufacturing, engineering and technology group at the Michigan-based Center for Automotive Research. "From that perspective, it's important for Volkswagen to succeed here."