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How Volkswagen aims to boost Canadian market share by 40% in five years

VW Canada CEO John White is taking over the Australian subsidiary in April.

Fernando Morales/The Globe and Mail

Volkswagen Canada Inc. has boosted sales in each of the past five years in a tough market, but president John White has a big goal for the next five years – increasing its share of the Canadian market by 40 per cent by 2018.

The goal of hitting a 5-per-cent market share within five years underlines how the already fierce competition for Canadians' driveways will ramp up even more during the rest of the decade as global players slug it out country by country.

VW is looking to be the most prestigious brand among mass market companies. "We want to be the most aspirational volume automotive brand in Canada," Mr. White said in an interview.

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That 5-per-cent goal, which compares with 3.5 per cent of the Canadian market last year, is VW Canada's contribution to its parent company's goal of selling 10 million vehicles globally by 2018.

It would translate into sales of 85,000 in an overall market of 1.7 million vehicles, which would be a doubling of sales for the auto maker in less than a decade.

Mr. White will be watching from afar for most of that time, because he is departing as CEO of VW Canada on April 1 to take on the same job at Volkswagen Group Australia.

But he leaves a track record of five successive years of sales increases since taking over the Canadian post in 2008 and, for his successor Maria Stenstrom, the 5-per-cent target.

VW is picking up a strong head of steam after being an also-ran in the Canadian and U.S. markets for decades.

One of the keys to the growth strategy is a new plant in Chattanooga, Tenn., which produces the mid-sized Passat sedan and boosted production last July by adding a third shift of workers one year after it opened.

That plant is also expected to be the home of a new mid-sized crossover utility vehicle that will fit between the compact Tiguan CUV and the full-sized Touareg.

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Building the Tennessee factory helped Volkswagen reduce the price of the Passat by about $7,000 from earlier versions that were imported from Europe and thus bore the high costs associated with what was then a soaring currency.

"We've been able to reposition the brand from a pricing perspective to make it more affordable," Mr. White said.

But there are some holes in the lineup that he wants to fill and some production shifts of vehicles supplied to Canada that he figures will also help boost sales.

"To get to the types of volumes we need to get to we need to bring in a subcompact car," he said. That would be smaller than the compact Jetta, which was the company's best-selling vehicle last year and represented 45 per cent of Volkswagen's 59,132 deliveries.

The problem, he noted, is that growth in the subcompact segment has stalled because the prices of compact cars have fallen so low.

"The [subcompact] market is flat-lining at just over 100,000 units [annually] and it doesn't seem to have any life," said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. That means it will be more difficult to pick up market share than it would be if a new Volkswagen subcompact were entering a growing segment.

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But sales of 85,000 for the company are possible, Mr. DesRosiers said. "It's a stretch goal saying 85,000, but it's a doable goal."

The next generation of the compact Golf will be built in Puebla, Mexico, instead of Wolfsburg, Germany, which should help boost sales of that car, Mr. White said.

New engine technologies such as hybrids and what he calls a sharper marketing program will also help boost sales, he added.

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About the Author
Auto and Steel Industry Reporter

Greg Keenan has covered the automotive and steel industries for The Globe and Mail since 1995. He also writes about broader manufacturing trends. He is a graduate of the University of Toronto and of the University of Western Ontario School of Journalism. More

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