Volkswagen Thinks The US Could Be Its Economic Savior. Is It Chasing A Pipe Dream?

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In January, 1949, two Volkswagen Type 1 Beetles arrived in New York City. Six years later, Volkswagen of America was founded. The original Beetle was cute in an ugly sort of way. It was under-powered and its heater was anemic, but it was cheap and that was enough for many Americans. In fact, Volkswagen made a number of self-deprecating commercials that celebrated its low price and its foibles. Here is one called “Keeping Up With The Kremplers.”

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From The Beetle To The Rabbit

Eventually, the allure of an inexpensive car that traced its heritage to the 1930s began to fade. The company reluctantly made the transition to a new car called the Rabbit in the US. In 1978, Volkswagen took over a former Chrysler factory in Westmoreland County, Pennsylvania, where it made more than one million cars over the next ten years. At the time, it was the first foreign owned automobile factory in the US since the Rolls Royce factory in Springfield, Massachusetts closed in 1931.

For a while, Volkswagen attracted customers by positioning itself as a builder of performance cars. The Rabbit GTI was very popular. It was followed by the Sirocco and Corrado, which were less so. Soon, Japanese manufacturers built their own US factories in the US and began offering modern cars customers actually wanted.

In response, Volkswagen shifted its focus to diesel powered cars,. That worked for a while, until the Dieselgate fiasco. Today, its market share in the US is a dismal 3.2 percent — well behind both Nissan and Subaru.

Headwinds In The Marketplace

Volkswagen once earned lofty profits in China, but those days are gone. At home, the company is planning to close four factories in Germany and slash its workforce by 100,000 over the next four years.

Last week at the Paris Automotive Summit, Oliver Blume, the CEO of Volkswagen Group, told the press he now believes the US market could be key  to reviving the company’s fortunes. That is despite the crushing tariffs imposed by the current administration, which the company say are costing it more than $5 billion annually.

“The US is one big growth opportunity for Volkswagen Group, and therefore we are investing heavily,” Blume said. “For Volkswagen, we also have in mind to enter the very attractive rugged SUV and pickup segment. The US market is of great strategic importance to the Volkswagen Group. Our growth strategy for the region is accordingly ambitious. We see the US, especially, as one stable market for the future, with stable profit pools.”

Ruggeder And Ruggeder

Every automaker who sells cars and trucks in the US is chasing the “rugged” theme. Their ads all feature dirt roads, sweeping vistas, and flowing rivers, as if every driver climbs Pike’s Peak and fords the Colorado River every day on the way to work. In this fantasy world, there are never any other cars on the road and every day ends at a remote campsite in the Grand Tetons.

VofA wants to capture a piece of that magic with the vehicles that are said to be coming from its Scout division. Plans for that division were announced in 2022, but production at its new factory in South Carolina is not expected to begin until 2028, at the earliest,

Audi is desperate to build its high profit SUVs in America, but has no US factory available. In theory, the Volkswagen factory in Chattanooga has spare capacity, now that production of the ID.4 has ended. Could it build its cars at the Scout factory in South Carolina? Nobody knows.

Blume also said Volkswagen wants to introduce a midsize pickup truck to compete against the Chevy Colorado, Ford Ranger, and Toyota Tacoma. Good luck with that. Truck buyers are the most brand loyal customers there are. Toyota has been trying to crack the full size pickup truck market in the US for thirty years, with limited success. Hyundai and Kia both plan to introduce new pickups to the US market by 2030, and Stellantis says it is bringing back the midsize Dakota pickup in early 2028.

Meet The New Boss

Former Audi sales chief Marco Schubert took charge of Volkswagen’s operations in North America on October 1, 2026. He is expected to create a plan to return the company to profitability within 100 days. Bloomberg says his biggest challenge may be the Byzantine bureaucracy at company headquarters in Wolfsburg, Germany.

Schubert faces a sclerotic decision making process, because Volkswagen Group is not a single automaker but a federation of fiercely independent brands. Audi, Porsche, and Volkswagen all have their own engineering cultures, product priorities, and power centers that compete for scarce financial resources. Executives in Wolfsburg have tried to impose common platforms and technology, with mixed success.

Some may recall when every General Motors division made its own engines and transmissions, which promoted innovation. However, the inefficiencies built into the procurement process cost the company dearly in squandered profits.

“There is probably a need for some humility on the part of the German management, just to really sit and listen and internalize what it is that the US market needs, because it’s not what other markets need,” Ed Kim, president of AutoPacific, told Bloomberg. “The market they’re trying to get into is very, very challenging and a very, very crowded space. It’s vastly different from Germany. It’s vastly different from China.”

Where Does Scout Fit?

Another conundrum Schubert needs to resolve is how to manage dealer expectations when its Scout vehicles are ready to go on sale. At the present time, Volkswagen wants to cut them out of the loop entirely and sell its Scout vehicles direct to the public the way Tesla and Rivian do. Not surprisingly, the company’s long suffering US dealers, who have seen their sales dwindle for decades, are none too pleased with that idea.

The question is, can Volkswagen, Audi, and Porsche compete head to head in the US market with combustion engine powered cars and light trucks or should it lean into battery electric vehicles instead? The US currently is bitter ground for planting EV seeds, but that could change significantly in a little over two years. To be ready, Volkswagen needs to start planning tomorrow’s products today. In 1949, it found success swimming upstream against the tide. Should it do so again?

• Source: https://cleantechnica.com/2026/10/18/volkswagen-thinks-the-us-could-be-its-economic-savior-is-it-chasing-a-pipe-dream/