Globe Drive

For decades, the executives who run Volkswagen AG apparently have been surprised to see their brilliant cars outsold by Toyotas and Hondas and so many other imports here in North America.

If not surprised, how else to explain VW’s unwillingness to develop models specifically for Canadians and Americans?

It has been as if VW’s brain trust concluded that its exports were more than good enough – good enough for millions of buyers in Europe and around the world – and were surprised to find Americans and Canadians felt otherwise.

Or perhaps this is wrong; perhaps VW decided it was more cost-efficient to cater to a smallish pool of Canadians and Americans who are perfectly happy to buy the same Volkswagens that Europeans like so much.

In other words, Canada and the United States weren’t worth the bother.

Volkswagen

The Automobile Journalists Association of Canada has named the new Volkswagen Golf GTI the Best New Sports/Performance Car under $50,000 for 2010.

During the decades when Toyota, Honda, Nissan and others were aggressively opening plants in smallish cities from Ontario to Indiana, from Tennessee to Ohio, VW had nothing but a beachhead in Puebla, Mexico.

While so many importers were sinking huge sums into design and engineering centres from California to Michigan, VW could boast of only a small design studio in California.

No wonder, then, that while so many Asian importers were dramatically increasing sales and market share in Canada and the United States, VW stagnated – at one point in the early 1990s, sales slipped so badly the company considered leaving the United States altogether.

In Canada – well, since the worst of VW’s trials in the 1990s – VW ran its operation here like it was located in the 51st state. The big management decisions were all made in Michigan.

But now, well, much of that is different.

As of Jan. 1, 2008, VW Canada ceased to be a subsidiary of Volkswagen of America in the United States. The new VW Group Canada president and chief executive officer, John White, reports directly to head office in Wolfsburg, Germany.

VW also is on track to open its first car plant in the United States since it stopped building Rabbits in Pennsylvania two decades ago. VW’s Chattanooga, Tenn., plant will open in 2011, spitting out a new mid-size sedan to replace the current Passat.

The new mid-size car is a model specifically designed for American tastes – tastes that have made the Toyota Camry the best-selling sedan in North America. So, yes, VW has finally recognized the need to tailor cars for the local North American market.

Volkswagen

2010 Volkswagen Golf

For Canada, this means VW is giving more attention to what we buy, too. No, this does not mean the Polo subcompact is going on sale here soon. Contrary to many reports, VW insiders doubt the Polo will be in their lineup by 2011. VW officials say they’d like to see the Polo for sale here, but they are having trouble with the economics of it all.

Polo aside, VW Canada is launching a new family of Golf vehicles – three- and five-door hatchbacks, wagons, diesels and the pocket rocket GTI. The Golf hatchbacks start at just over $20,000, while wagons begin at $22,675. The GTI has a base price of $28,675.

That pricing reflects a subtle but real repositioning of the Golf line. There are no Golf strippers or loss-leaders; the all-new, sixth-generation Golf starts as a slightly premium compact hatch and goes up-market from there. The City Golf ($15,300), with its older design and technology, carries on as VW Canada’s entry model for another year.

At that point, VW will introduce the successor to the current Jetta. Target launch date: October, 2010, as a 2011 model. This Jetta, a sedan, is being engineered and styled to go head-to-head with the Honda Civic, Toyota Corolla, and the like. It likely will start at around $16,000.

In the meantime, VW Canada has successfully launched the Tiguan compact SUV, updated the Touareg SUV and its TDI diesel engine, and begun selling the Routan minivan built for VW by Chrysler. Diesel, of course, is essential for Canada. No one else offers a small, affordable diesel like the Golf TDI – and no one likely will, at least for the foreseeable future.

VW Canada president John White, in Montreal to help introduce the new Golf, says Wolfsburg now has a better understanding of Canada than it has in years. The current and future models reflect that. And in return, Canada is expected to do its part in VW’s drive to become the biggest car company in the world by 2018.

Volkswagen

2010 Volkswagen Golf

VW, of course, is not immune to the global economic downturn, but while its main rivals for global automotive pre-eminence continue to struggle, the German company is making money and radiating a mixture of confidence and guarded optimism.

Indeed, while profitable in a world of unprofitable car companies, the money is not easily rolling in for VW. Just two weeks ago, Europe’s largest car maker announced an 81-per-cent decline in third-quarter operating profit and reaffirmed its forecast for a full-year drop in final profit. Third-quarter operating profit dropped to €278-million ($440-million), with results weighed down by heavy losses at its Spanish value-brand Seat and at ultraluxury Bentley.

VW, though, still expects to gain market share at the expense of other auto makers. As CEO Martin Winterkorn pointed out at a press event in Germany earlier this year, VW made €1.4-billion in the first half of 2009 and gained 1.8 per cent in global market share.

The future, particularly with the renewed emphasis on the United States and to a lesser extent Canada, should be far brighter than the past for VW. With the struggle for control of Porsche over (VW will merge Porsche into its brand structure by 2011), and plenty of new models in the product pipeline, VW looks poised for greater sales.

But of course that is exactly how Toyota looked when it claimed the title of world’s biggest auto maker. Since that day less than a year ago, Toyota has posted massive losses and is struggling to get ahead of a number of embarrassing quality issues.

VW may want to become the largest auto maker in the world, but as the old saying goes, be careful what you wish for – you just might get it.