It was a long time coming, but nearly two years after Volkswagen’s diesel emissions scandal erupted, the brand’s Canadian sales finally began to recover.
The recovery began much sooner in the United States. Following the September 2015 scandal, Volkswagen of America began reporting year-over-year sales improvements in December 2016. In fact, only once in the last ten months has Volkswagen of America failed to expand its U.S. sales.
But the brand’s U.S. recovery masks just how far the brand had actually fallen in the U.S. Prior to the diesel scandal, Volkswagen of America sales were falling, and falling fast. As a result, even with steady improvements, Volkswagen is likely to sell 20 percent fewer vehicles in the U.S. this year than it did in 2012.
In Canada, on the other hand, Volkswagen was surging prior to the news that fraudulent emissions software was allowing Volkswagen to cheat emissions testing. Even with the scandal, Volkswagen Canada reported an all-time record in annual sales in 2015.
Based on recent growth patterns, that record may well be broken in Canada in 2017 because of a suddenly strong utility vehicle lineup. Thank goodness for SUVs.
Over the course of the summer – July, August, September – 2017 Q3 sales at Volkswagen Canada jumped 53 percent compared with 2016 Q3. It certainly helps that Volkswagen’s cars are selling more often this year than last.
In September, for example, Volkswagen Canada reported a 38-percent uptick in Golf sales and a 13-percent rise in Passat volume. This allowed total car volume to jump 12 percent despite a 3-percent downturn in car volume across the industry.
But there can be no denying that Volkswagen’s newly expanded SUV/crossover portfolio is the real difference-maker. The new Volkswagen Atlas, a three-row challenger of the Ford Explorer and Toyota Highlander, produced 770 sales in September and has now recorded 2,674 sales since going on sale in May. Those are 2,674 sales Volkswagen would have missed out on at this time last year.
Volkswagen also introduced a new Tiguan in August while also allowing the old, first-generation Tiguan (pictured above) to hang around as a value option. The new Volkswagen Tiguan is much larger, is often equipped with a third row of seating, and is a far more viable alternative to the Honda CR-V and Toyota RAV4.
Total Tiguan sales shot up 151 percent to 2,300 units in September. In fact, old Tiguan volume rose 18 percent to 1,082 units. Combined, the Tiguan family reported its highest Canadian output ever and ended the month as Canada’s seventh-best-selling SUV/crossover, a huge accomplishment for a vehicle that ranked 22nd overall in calendar year 2016.
Indeed, no vehicle line in Volkswagen showrooms sold more often in September than the Tiguan.
Volkswagen brand boss Herbert Diess said in late August that the brand hoped to produce 40 percent of its global sales with SUVs. That was a stunning statement on behalf of a brand that has been chronically late to the SUV party, one that determined the new T-Roc should not be destined for Canada.
After all, in 2016, Volkswagen Canada earned only 21 percent of its sales from the tiny Tiguan/Touareg lineup. South of the border, fewer than 15 percent of Volkswagen’s 2016 U.S. sales were SUV-derived.
But what a difference a few months makes. Volkswagen has shown in the past what SUVs could do for a brand. In Canada, Audi’s three-pronged Q lineup (Q3, Q5, Q7) accounts for 51 percent of the brand’s volume. At Bentley, the newly launched Bentayga produces six in ten Bentley sales. At Porsche, the Cayenne and Macan utilities generate 69 percent of Canadian volume.
And Herbert Diess can now look at Volkswagen Canada as proof that the company can quickly evolve its SUV lineup to accomplish its goals. In September, for the first time, over 40 percent of Volkswagen Canada’s volume was SUV-derived.
How long before it’s more than 50 percent?