Update: Weak dollar may not delay U.S. launch of next-gen VW Golf (Rabbit)
Update: A statement by VW's U.S. spokesman, Steve Keyes, indicates the Golf Mark VI, or Rabbit as it's known in the U.S., will be arriving for sale as scheduled. The previous report of the Mark VI's delay was based on sources believed to be close to Martin Winterkorn, chairman of the VW Group.
The new model's sales figures are already in VW's American financial estimates, according to the latest news, from an exchange between Keyes and Inside Line. Keyes did not comment on the financial reasoning allegedly behind the decision to pull the Mark VI Golf from U.S. sales, nor on the similar move taken to keep the Scirocco out of America. The falling dollar and rising industry costs are behind that decision, and had been credited with the Mark VI's U.S. sales delay as well. What, if anything, has changed, it unknown.
Original: The United States' economic problems, which some economists are starting to call a recession, are affecting carmakers both within and outside the country alike. In March Volkswagen announced it would not import the new Scirocco hatchback to the U.S. because of profitability problems due to the weak economy. Now, latest reports indicate the updated Mark IV Golf could also be kept from U.S. buyers for the same reason.
A report in Germany's Spiegel Online says VW boss Martin Winterkorn is delaying introduction of the new VW hatch in the U.S. and Brazil as a result of tight margins and poor import conditions in those markets. This isn't the first time such a move has been made by VW. The U.S. soldiered on with the Mark IV Golf for some time after the European update to the Mark V platform. Ford has been selling a cheaper version of its Focus in the U.S., and until lately GM had as well with its European models.
The margin for the decision is remarkably thin, but in volume sales, even small variations in profit or loss can make all the difference. The current exchange rate, import costs and market conditions would give the new Golf a profit ratio of just 3.4% in America. Winterkorn says U.S. sales just can't be justified with less than 5% profit, and so the Golf will remain forbidden fruit until the dollar situation changes.
How the move will impact VW's stated goal of catching Toyota, the world's highest-volume carmaker, in 10 years is unclear, but keeping one of its best-selling models out of one of the world's premier car markets certainly can't help. The new Mark VI Golf is expected to make its world debut at the Paris Motor Show in November.