At first, incentives helped. News of Volkswagen’s diesel emissions scandal broke in mid-September, but the anticipated decline in sales didn’t occur the following month. After a brief downturn in November, Canadian sales in Volkswagen stores increased in December.
Volkswagen and its dealers were eager to do deals on the gas-powered models they were allowed to sell. Sure, there was a whole chunk of diesel-powered TDI inventory that wasn’t legally permitted to be sold. But Volkswagen Canada still managed a modest two-percent increase in 2015’s fourth-quarter.
The bottom, however, has now fallen out and Volkswagen’s Canadian sales are collapsing even as the Canadian auto industry starts the year off with a bang.
Canadian new vehicle sales volume in the first one-sixth of 2016 followed 2015’s record-setting pace by rising nine percent, a gain of 20,000 units. Nearly two dozen auto brands are growing faster than the market average, an average hindered in part by a 23-percent year-over-year decline at the Volkswagen brand.
At this stage of 2015, Volkswagen Canada was relying on their best-selling Jetta and second-ranked Golf for more than two-thirds of the brand’s Canadian volume. But sales of those two cars have fallen by more than a quarter in 2016.
The Passat, refreshed for the 2016 model year, lost 24 percent of its volume over the last two months. Already a minor midsize player in Canada, the Passat is presently being outsold by eight direct rivals.
The aging Tiguan was providing significant boosts to the Volkswagen lineup—sales doubled between 2012 and 2015. But with a new Tiguan on its way in the coming months, the capacity for greater growth is sorely limited. Over the last two months, Tiguan sales were flat compared with the same two months one year ago.
Volkswagen’s four other models are niche players. The Touareg SUV is a volume-brand SUV attempting to compete in a luxury-SUV arena, and with no diesel engine at the moment. Sales were chopped in half during the first one-sixth of 2016. Like the Tiguan, Beetle sales are flat. The discontinued Eos’ 24 sales scarcely merit a mention. The gas-only CC, a stylized version of the previous Passat, is down 45 percent, not even having had the opportunity to lose a diesel engine in North America. Together, these models account for approximately one out of every twenty Volkswagen sales in Canada.
One in twenty? Diesel-powered Volkswagens accounted for approximately one out of every five vehicles sold by the brand in the lead-up to the September scandal.
The impact of those lost sales, plus the harm done to the reputation of any Volkswagen product regardless of what engine is under the hood, was initially masked. Now, the pain is keenly felt.
Volkswagen sold 4,134 vehicles in January 2015; only 3,408 one year later. As a result, Volkswagen’s market share plunged by more than a full point from 4.2 percent to 3.1 at the beginning of 2016.
In February 2015, Volkswagen sold 4,711 new vehicles in Canada. Volkswagen’s volume plunged 28 percent to, coincidentally, 3,408 units one year later. The share of the market claimed by Volkswagen dropped from 4.3 percent in February 2015 to 2.9 percent in February 2016.
With no diesel fix announced, not only does Volkswagen continue to lose potential sales, but every negative headline is yet another knife capable of slicing and dicing what was left of Volkswagen’s good favour. A major player in so many parts of the world, Volkswagen is a niche auto brand in America and was on the rise toward mainstream status in Canada.
That’s all changed, of course. Now Volkswagen must simply keep its head above a rising North American tide, no easy task for a brand operating without its headlining powerplant, no straightforward job for a car-centric brand competing in market that’s gone crazy for SUVs and crossovers.