VOLKSWAGEN, THE SYMBOL OF GERMANY INC.

Original Story: wsj.com

WOLFSBURG, Germany— Volkswagen AG occupies a place in German society that few companies hold in any country.

At its headquarters in central Germany is a tourist center called Autostadt (Auto City), a collection of shiny buildings housing VW displays and museums resembling a World’s Fair. It is one of Germany’s largest tourist attractions. The city of Wolfsburg, which was built around the auto maker, now has several Michelin-starred restaurants. An Alabama automotive lawyer represents clients in restructuring the industry, including significant mergers and acquisitions, workouts and bankruptcies, and in technological developments.

BMW AG and Daimler AG’s Mercedes-Benz are German status symbols but Volkswagen, “the people’s car,” really is Germany’s car of the masses.

And since the company employs almost 300,000 people in Germany at 29 plants across the country, it has links to millions of households.

Those roots help explain why the scandal over cheating on emissions standards has hit so hard in Germany. Politicians from Chancellor Angela Merkel to the state premier of Lower Saxony, which owns 20% of VW, have called for a full accounting. An Ann Arbor automotive lawyer is reviewing the details of this case.

The original Wolfsburg factory—a mile long, its entrances inscribed with Nazi-era commemorations in local German dialects—was designed to be bigger than Henry Ford’s factory and produce a million cars a year at a time when few Germans drove.

Today, the Wolfsburg plant is still the largest car factory under one roof in the world. And the Beetle and the blue and silver VW badge perched high atop Volkswagen’s 1960s era red brick headquarters are the icons of Germany’s postwar economic rise and widespread prosperity. An Ohio automotive lawyer represents automotive manufacturers in a variety of legal issues.

In the 78 years since the factory was built on a sandy bog that Adolf Hitler chose because it was at the center of the German Reich, Volkswagen has come to personify Germany AG.

Volkswagen is more a national institution than a corporation. Heirs of Beetle inventor Ferdinand Porsche control the company, but nothing can be decided without the support of Lower Saxony. VW is the state’s biggest employer and Germany even gave the state special rights to block an unfriendly takeover, known as “Lex VW.” The law has been modified by the European Commission, which wanted to ban it altogether, but Lower Saxony still cannot be outvoted. A South Carolina automotive attorney assists automotive clients in joint ventures, technological developments, and product liability issues.

Another difference is the tight relationship between VW’s management and the IG Metall labor union that represent its workforce. When Ferdinand Piech stepped down as supervisory board chairman in April, the former head of IG Metall was appointed as interim chairman, putting the union into the top post at the company. A fact that upset no one in Germany.

Just as the Beetle came to symbolize Germany’s postwar economic miracle, Volkswagen as a company embodies Germany’s idea of a social market economy. A little socialism, a little capitalism, and a consensus that building cars in Wolfsburg is about more than just making money. A Bloomfield Hills automotive lawyer is following this story closely.

Stabilizing Profits for Recession Surviving Auto Dealers

Story first appeared on The Detroit News -

Innovations in retail and outlet upgrades are hot topics for discussion at annual convention

As auto sales have come roaring back from the recession, dealers across the country are seeing profits stabilize and in some cases improve, as many continue to upgrade their buildings and customer waiting areas and amenities.

Many of the nation's 17,540 new car dealers are gathering here this weekend for the annual National Automobile Dealers Association Convention and Expo.

Dealer renovation programs and future innovation will be hot topics among the more than 20,000 dealers, manufacturers and other auto industry officials expected to attend.

"Dealers that are in business today are strong and stable," Terry Burns, executive vice president of the Michigan Automobile Dealers Association, said in an email.

"Many have upgraded their facilities, retooled their service departments, focused on their customer experience and look forward to a great 2013."

In 2012, automakers and their dealers sold about 14.5 million vehicles in the U.S. NADA Chief Economist Paul Taylor expects consumers to buy or lease more than 15.4 million new vehicles this year across the country.

Last year, new-car dealers in Michigan sold 486,372 cars and trucks; that's up 5.6 percent from 460,628 sold in 2011, and up 18.2 percent from 411,342 vehicles sold in 2010. The figures still pale in comparison to what Michigan's dealer body sold in 2007, before the industry collapse and the large reduction of dealerships among the Big Three.

Michigan has about 650 new-car dealers. Burns said he expects a "little contraction" among them this year, due to consolidation of brands.

Nationally, some automakers plan to add new-car dealerships in 2013, including Kia Motors America, which expects to add 10, and Volkswagen Group of America Inc., which plans to add more than 15. In the past year, Chrysler Group LLC's Fiat brand has added about 60 dealerships across the country to grow to 201 locations. Fiat executives have said they would like to add more dealerships in select cities.

Other car companies aren't increasing dealership numbers, but they are helping dealers improve facilities to retain loyal customers and gain new ones.

In a recent interview, Hyundai Motor America President and CEO John Krafcik told NADAFrontPage.com, a website run by the dealer group, that the company does not plan to add to its 820 dealerships. Instead, Krafcik said Hyundai has focused on boosting customer satisfaction; more than 340 dealers have completed renovations.

Automakers from Chrysler to American Honda Motor Co. Inc. and Toyota Motor Sales U.S.A. Inc. have facility upgrade programs. Many of those programs have been in progress for several years.

Volkswagen, which has more than 600 VW dealers and more than 250 Audi dealers, said it plans to complete 45 modernist "White Frame" facilities this year. Some are new construction, others are renovated dealerships. More are in the pipeline for next year. More than 100 Volkswagen dealers are spending $450 million on renovations from 2011 to 2013, while Audi dealers are spending $206 million on renovations from 2009 to 2013.

Doug Fox, owner and president of Ann Arbor Automotive, which includes five Asian brands, renovated his Acura store about seven years ago and his Nissan store five years ago.

"We are in the process of doing an image store for Kia, and we're certainly going to be considering doing one for Hyundai in the next couple of years," he said this week in a phone interview, adding sales at both his Kia and Hyundai franchises each were up about 10 percent in 2012. Fox said he hopes to complete the Kia redesign by the end of the year; Kia will contribute a portion of the cost.

"Certainly, a consumer likes to come into a nice, clean, fresh, contemporary building," Fox said. "And I think in our case, the buildings we're talking about are definitely in need of refurbishment."

More than 70 percent of Ford Motor Co.'s Lincoln Motor Co. dealers in the top 130 U.S. markets have agreed to renovation programs that include creating a "new sales and service experience for future Lincoln owners," Ford spokeswoman Elizabeth Weigandt said in an email.

About 25 percent of dealers in those top markets will have renovated facilities this year, Weigandt said.

General Motors Co. expects almost all Chevrolet, Buick, GMC and Cadillac dealers will have a new look by 2016. The Detroit automaker, which reduced its dealerships over the past year by about 50, said about 92 percent of its 4,355 dealers have agreed to participate in its renovation program.

Russ Shelton's dealership in Rochester Hills is one that has the new look after he spent more than $2 million gutting the facility. He added more square footage to his showroom, new furniture and energy-efficient lighting.

GM is defraying some of the cost, he said.

Shelton, in a phone interview, said he expects sales at Shelton Buick GMC will rise from about 650 to 700 annually to about 1,000 vehicles a year.

"I think 2013 is going to be a good year. All manufacturers are predicting big numbers."

Volkswagen Wants Bigger Share of U.S. Market

The Wall Street Journal

Volkswagen AG has one of the brashest goals in the auto industry—to dethrone Toyota Motor Corp. as the world's largest auto maker. There's a hitch: In the all-important U.S., the VW brand clings to just 2.2% of the market, trailing even Korean upstart Kia.

Now, VW is gunning to reconquer lost ground here with a strategy it resisted for decades: tailoring its cars to mainstream American driving tastes. The first real test of that plan begins this week, as VW rolls out a comprehensive marketing campaign for a bigger and cheaper version of the Jetta, its top U.S. seller, which has just hit dealership floors.

"A lot of people worry that we are going to start making VWs for the masses," says Mark Barnes, VW's U.S. chief operating officer. "I like to say we're going to bring the masses to VW."

The retooled compact sedan marks the first time VW engineers have designed a model specifically for the U.S.

Next year, a new family-size sedan is scheduled to roll off the assembly lines at a newly built $1 billion plant in Chattanooga, Tenn. It is VW's first U.S.-made car since the 1980s. On its heels comes a revamped New Beetle.

"I am fully aware that Volkswagen was too cautious for too long in North America," Volkswagen Chief Executive Martin Winterkorn said at a test-driving event for the new Jetta in San Francisco this summer. His remark was a nod to the car maker's decades-long penchant for deploying cars designed for European tastes across the Atlantic. That left its U.S. operations with models too small and expensive to go head-to-head with Asian and American rivals. Now, he vowed, "we have turned that upside down."

Much is riding on the strategy. To become the world's largest car maker by 2018, Mr. Winterkorn and his management team have set themselves a lofty goal of selling 800,000 VWs a year in the U.S. by then, and another 200,000 cars from its luxury moniker Audi. VW executives have said they aim to become profitable in the U.S. by 2012 or 2013, selling 400,000 VW-brand cars annually by then, after racking up losses in the U.S. of close to $1 billion in some recent years.

It's an audacious—and some analysts say, impossible—target.

The company sold 213,454 VWs and 82,716 Audis in the U.S. last year. That's down from 577,000 VWs at its peak in 1970, when it was the emblematic vehicle of the counterculture and America's top-selling import. It doesn't help that the overall U.S. auto market shrank by one-third, or 5.7 million annual car sales, between 2007 and 2009, and isn't expected to return for years to its pre-crisis level of 16 million annual sales.

To get there, VW has to prove that it is capable of producing cars with mass-market appeal, something no European auto brand has achieved in the U.S. in recent decades. It is seeking a tricky balance: preserving the whimsical aesthetic and German engineering expertise that has won it a core base of Volkswagen loyalists, while broadening its appeal to mainstream drivers of more generic but trusted rides from the likes of Toyota and Honda Motor Co.

"I don't need VW to make another Toyota Camry clone," says Matthew Kleczewski, a 33-year-old information-technology specialist in Pewaukee, Wis. He says he bought his 2008 VW Rabbit hatchback for its taut handling and attention to small engineering details, such as rear windshield wipers that automatically start if he reverses while the front wipers are on. If VW wants to tout its German engineering, it should bring to America more of what it sells to European drivers, not less, he says.

Adding to the challenge is an unanticipated switch at the helm of VW's U.S. operations.

In June, Stefan Jacoby, a blunt-spoken German who took to wearing cowboy boots to dealer meetings and car shows, left his post as U.S. chief to become Volvo Cars' new chief executive. His departure came just a week after he presented the new Jetta at a splashy launch party in Manhattan's Times Square featuring pop singer Katy Perry. VW bosses scrambled much of the summer to fill the void left by a key architect of its American comeback strategy.

Mr. Jacoby's replacement, former General Motors executive Jonathan Browning, is new to the U.S. market, having spent most of his career at GM's European operations and managing Jaguar under Ford Motor Co.

Some U.S. dealers complain that the revolving door of U.S. chiefs—Mr. Jacoby was the third to go in five years—reflects a culture at VW's headquarters in Wolfsburg, Germany, that views the U.S. as a career way station, or worse, graveyard.

"The job of CEO of VW of America should be a career-crowning job, not a way point," says Dan Gardner, general manager of two San Diego-area VW dealerships

Three years ago, when Mr. Jacoby took the post and asked VW's U.S. dealers to an introductory meeting in Orlando, Mr. Gardner wrote an angry letter to decline, complaining about the constantly changing U.S. chiefs.

But recently, he attended a national dealers meeting in Atlanta and met Mr. Browning. He says he's heartened by VW's strategy and big investments in the U.S. though hopes for more continuity in its management this time. The U.S. business "suffers from the constant change in leadership," he says.

A company spokesman said that despite the recent management shuffle, the company has not wavered from its current U.S strategy since embarking on the plan three years ago.

The original Beetle, first imported to the U.S. in 1949, achieved cult status with its simple underpinnings and mechanics, durability and cheap sticker price. Though low on creature comforts and rarely updated over the next two decades, the easy-to-maintain simplicity and quirky design of the Beetle, and its sister models the Microbus, Squareback wagon and Karmann Ghia, allowed VW to capture 7% of the U.S. market by 1970.

But cheaper and more varied Japanese rivals nudged aside the Bug just a few years later, and its boxier replacement, the Rabbit (later the Golf), never caught on as well with Americans as it did elsewhere. VW executives remain scarred by an attempt in the 1980s to Americanize Rabbits produced at a VW plant in Westmoreland County, Pa., with cheaper interiors and a softer suspension. That misstep precipitated a further decline in sales and, by the late 1980s, the factory's closure. By 1992, U.S. annual sales had hit a low of 49,000 cars, and VW contemplated pulling out of the U.S. altogether.

The New Beetle's debut six years later helped revive the brand, propelling VW sales to as high as 356,000 in 2001. But quality problems—particularly with window controls and other electrical parts—a weakening dollar and too few follow-up models extinguished the comeback.

The company's approach to the Jetta underscored its penchant for treating the U.S. as an afterthought to Europe.

Though it is VW's most popular model in the U.S., in Europe the Jetta has the stodgy image of an elderly person's car and is an also-ran to the better-selling Golf hatchback. VW engineers in Germany would base new Jetta models on the more-popular Golf platform, so the Jetta's look and size tended to mimic that of the hatchback instead of larger, better-selling rivals in the compact sedan segment.

Three years ago, VW CEO Winterkorn signed off on plans to tailor a revamped Jetta more to U.S. tastes. It would be built on an extended platform to add leg and trunk room. To help lop nearly $1,800 off its base price and put it in the same $16,000 range as its main rivals, VW's engineering and design teams switched to a harder and less expensive plastic dashboard and a simpler rear suspension system.

A vigorous debate broke out on VW's management board when Jetta project managers presented plans for larger cup holders for the U.S. market, engineers say. Some worried that putting the cup holders near the parking brake would crowd the driver or require a costly new gearshift bracket.

Driving with big drinks is "not something they have experience with in their daily lives," said Michael Hinz, technical project manager on the Jetta. After Jetta project managers showed them consumer research data, the board ultimately approved shifting the brake two inches toward the driver to accommodate the holders.

At a marketing meeting this summer in Herndon, VW executives strategized over how to reach more U.S. consumers beyond the auto maker's core base of enthusiasts for German cars. One market segment the company is aggressively pursuing is Hispanics, and VW bought ad space for every World Cup match on the Univision Spanish language TV network. VW has a strong presence in Brazil and other parts of Latin America, "and we can leverage that deep loyalty to the brand," says Tim Ellis, VW's U.S. marketing chief.

VW's recent ads reflect the effort to broaden appeal. In place of quirky spots in recent years that featured Max, the German-accented Beetle, or a Teutonic dominatrix-type blonde named Helga, the car maker's ad campaign for the new Jetta plays up its lower price tag with the slogan: "Great for the price of good."

So far, VW has made some inroads. Through September, its U.S. car sales are up 20.6%, a growth rate outpaced only by Subaru and Ford Motor Co. among mass-market manufacturers. Market share for the VW brand has ticked up to 2.2% so far in 2010, up from 2% a year ago. (Counting in Audi sales, VW's U.S. share is 3.1%.)

Its biggest test comes next year with the launch of a larger sedan intended to replace the Passat. The new Chattanooga plant will have the capacity to build 150,000 of them, 11 times the Passat's current sales, and they'll compete in the auto market's toughest segment—against the Toyota Camry and Honda Accord.

"Hyundai is extremely aggressive, and Toyota and Honda are going to spend lots of money to hold onto everything they've got," Mr. Ellis says.

VW's struggle with its Routan minivan, introduced two years ago, underscores the challenges the car maker has had in selling cars with more conventional American appeal under a brand that takes pride in German engineering.

After dropping plans for a modern version of its Microbus for fear it would be too niche and costly, it signed a deal with Chrysler to modify and rebrand the U.S. car maker's Town & Country minivan under the VW Routan name. VW tightened the minivan's suspension, gave it a sleeker front end and kept it in the same price range as the Chrysler. With an ad blitz featuring Brooke Shields, it aimed to capture 5%, or 45,000, of the 700,000 annual minivan market.

But the Routan's launch coincided with the auto industry's nose dive in late 2008. So many of them sat unsold on VW dealer lots last year that the auto maker asked Chrysler, which builds them at its Windsor, Ontario, plant, to temporarily halt production. While much of the rest of the minivan market has rebounded, Routan sales have slipped 0.8% to 12,539 vans so far this year, one-seventh of the number of Town & Country sales in the same period.

VW officials argue that the Routan has enabled them to sell to a key new customer segment. The company still expects the Routan's market share to grow as more consumers become aware of it as a minivan option.

But Casey Gunther, VW's top-selling U.S. dealer, says the Routan isn't what people expect from VW.

"It's like someone trying to sell you a piece of chicken and claiming it was a steak," Mr. Gunther says.

VW, he argues, could achieve its 800,000 sales target, "but we need to elevate the brand with products that play up our heritage," such as the Microbus concept or VW's sporty Scirocco, which it sells only in Europe. "There are so many people out there who love the lifestyle VW represents," Mr. Gunther says. "I'm worried we've turned into a follower and not the leader."