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2011 Volkswagen Jetta (Volkswagen)
2011 Volkswagen Jetta (Volkswagen)

Big hopes ride on VW's new compact Add to ...

Volkswagen AG - the sprawling automotive group with divisions as diverse as Bentley in Britain, Lamborghini in Italy and Porsche in Germany - has grand plans for the world and decidedly modest ones for Canada. We are, as often is the case, taking a back seat to bigger interests.

To be fair, John White, VW Group Canada president and CEO, says Canada does have a voice at the table where VW's North American plans are constantly and continually hashed out. (Remember, this is a German company; planning and producing a plan is central to everything.) But the voice of the United States booms much louder and it's driving VW's product plans.

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That said, VW Canada is about to launch the most important car here since the New Beetle. The sixth-generation 2011 Jetta, starting at $15,875, is moving down market to take on other compacts like the Toyota Corollas, Mazda3s and Honda Civics of the world - to name the three most popular cars in Canada.

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White thinks the new Jetta, which is flip-flopping its place in VW's lineup with the Golf (itself reinvented for 2010), will be worth 24,000 in sales during a full calendar year. Toyota, Mazda and Honda will each sell twice that number of Corollas, Mazda3s and Civics. But given that VW Canada is forecasting sales this year of about 44,000 cars and 50,000 in 2011, the 2011 Jetta is obviously critical.

But frankly, if Canada were a bigger, more important market, White would also be looking at offering a version of the subcompact VW Polo. He's not. And he quickly dashes any speculation that the Polo might come to Canada in the next two years. It's impossible for VW to price the European-built Polo low enough in Canada to compete with $10,000 Hyundai Accents, $12,000 Toyota Yarises, and sub-$13,000 Ford Fiestas.

VW Canada could also use some sort of compact van along the lines of the Mazda5. A crossover between the Tiguan compact and Touareg full-size SUV would help too - something to go against, say, the Toyota Venza. And, of course, a sedan to take on the Ford Fusion, Toyota Camry, Hyundai Sonata, Honda Accord and the like would be a big boost, too. The undersized and arguably over-priced Passat just does not cut it as a mainstream, mid-size sedan.

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So VW Canada is moving carefully and cautiously ahead with its growth plans. Some day VW and its luxury arm, Audi, might approach 80,000-100,000 in Canadian sales (Audi did less than 10,000 in sales last year).

"But I need a couple of additional products" to break through 100,000, says White, a Montreal native and devoted Habs fan (he still has season tickets). White, an avid runner, is not a plodder in business, but he does steer a course for VW Canada that is all about under-promising and over-delivering. Not surprisingly, in everything he's always careful to measure the tone coming from VW's German headquarters in Wolfsburg.

By contrast, the big VW boss, Martin Winterkorn, has been anything but shy about VW's goal of becoming the world's biggest auto maker by sales, if not by profitability.

"We want to take Volkswagen to the top of the industry by 2018," Winterkorn told reporters in San Francisco for the launch of the new Jetta. "We know that the United States is one of our main destinations on our way to the top."

Canada, meanwhile, is not unimportant; it's just that the U.S. market holds so much more potential and promise. Canadians may one day deliver 100,000 in combined VW and Audi sales; but the U.S is something else entirely. Winterkorn again said VW's goal is to sell 800,000 VW-brand vehicles and 200,000 Audis annually in the U.S. by 2018. Those are big numbers for a car company with just over six million vehicle sales last year around the world.

The Jetta alone in the U.S. should deliver 150,000 in sales a year. An all-new car designed specifically for American drivers, the 2011 Jetta will go on sale later this year. A hybrid version will follow in 2012 and we'll also get that in Canada. We won't get the Touareg Hybrid, however.

"The Jetta not only stands for the new self-confidence of Volkswagen. It also marks the beginning of a promising new chapter for Volkswagen in the United States," Winterkorn said. "North America will always be one of the largest and most important car markets."

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