DETROIT — Volkswagen is reducing production of its compact and midsize sedans in Mexico and the U.S. to deal with a glut as consumers veer toward crossovers and SUVs.
At the start of the year, the brand had the highest days supply of unsold inventory — 146 days — of any brand in the U.S., including 94,600 cars and 75,900 unsold crossovers.
"We've got some carryover inventory in the passenger sedan market. I think that's true for every brand," said Derrick Hatami, head of Volkswagen's U.S. sales and marketing, at the auto show here. "We've got some oversupply with passenger cars — with midsize and compact cars. We're working through that."
Hatami said the automaker, which now has a regional management structure with greater autonomy from VW's headquarters in Wolfsburg, Germany, has already taken steps to ease its inventory crunch.
"We're adjusting production. One of the things that's really great about having localized production in the North American region is we can do that relatively quickly," Hatami said. "It'll take a few months to work through, but we've already adjusted our production plan to do that."
He did not say whether Passat production in Chattanooga or Jetta output in Puebla, Mexico, would be cut back through down weeks or slowed assembly lines. The brand introduced a redesigned 2019 Jetta last week at the Detroit auto show that is due in dealerships midyear.
Hatami, who joined Volkswagen in June after leaving Hyundai Motor America, said one early priority has been to align VW's dealer network with the brand's goals. The brand held regional meetings with U.S. dealers in December to lay out its plans for 2018.
Hatami said the retailers appreciated the early meetings, which in the past had been held after the calendar had turned.
"The complaint that I've heard is 'We don't understand what your plan is; you guys aren't telling us what your long-term strategy is.' So, we laid them out in December for 2018," Hatami said. "And I think we've got most of our dealers aligned with us now."