RE: VW Taking On Mercedes

[Tom Haapanen <tomh@metrics.com>]

Indeed, the first thing you have to remember is that the focus for VW's
move is Europe, where VW is the clear #1 in the marketplace, and not
North America.

In Europe, VW is perceived as a modern, reliable and generally desirable
car.  The Beetle has been out of the picture for 20 years, and VW has
built a very good image with its three generations of Golfs, plus
Jettas, Ventos, Polos and Passats.

Now, what you have to realize that this isn't just about VW all of a
sudden building an S-class competitor.  The new Passat is already a
viable alternative (in Europe) to the C-class, so E-class is just a step
away.  A stretched version of the Passat with a V8 could be awfully
attractive to a lot of European buyers.

And I personally belive that much of this is a warning shot across the
bows of MB, who is trying to expand its product range downmarket.  Not
only does the C-class overlap the Passat/A4 price range in Europe, but
MB is also introducing a submini and a people mover, with others in the
works.  VW isn't planning to take this invasion of its turf sitting
down, and will instead hit MB where it hurts -- where its profit margins
are the highest.

In the end, remember that in Europe, MB is not just a prestige marque,
and thus to compete with MB doesn't require VW to be a prestige marque
-- just a full-line marque (which is what MB aspires to, too).

On the flip side, with the current state of the market and of the
VW-Audi dealer network in North America, I would not bet on VW importing
the "Passat+" V8 model here anytime soon.

-----
Tom Haapanen -- Software Metrics Inc. -- Waterloo, Ontario, Canada
A Microsoft Solution Provider Partner -- http://www.metrics.com/


>-----Original Message-----
>Date: Wed, 04 Jun 1997 17:52:58 -0500
>From: Pete Kraus <Pete_Kraus@EMORY.ORG>
>Subject: VW Taking On Mercedes
>
>Sean Ford's comment about public perception, not technical expertise,
>being the real obstacle to VW's proposed challenge to Mercedes is
>right on the money.  While acknowledging that VW's image in Europe is
>more upscale than in the U.S., I remain skeptical about the success of
>such a strategy.  Frankly, I think it's a waste of marketing resources
>when a more logical alternative exists.  
>[...]
>My opinion has a distinctly American perspective to it. I'm not entirely
>convinced the world needs another Mercedes competitor.  But if
>Ferdinand Piech is determined to try, it would seem easier to
>re-introduce prospective buyers to an old luxury name than to convince
>them that the maker of the oh-so-classless Beetle whose latter day
>products have suffered something of an identity crisis (not to mention
>the occasional negative comment regarding build quality and reliability)
>is now the prestige marque of choice.
>