VWs New Golf Loses Appeal

This is some interesting news from the Wall Street Journal about one of MINI's biggest rivals – especially outside the US. Here's an excerpt:

Volkswagen is aiming to sell much-pricier cars, starting with a souped up version of its once-affordable Golf, but sticker shock is driving even its most loyal customers away….

“Suzanne Kay has owned five VW Golfs since the mid-1980s. After checking out the latest version, she won't be buying a sixth.

One of the world's best-selling cars, which now costs more than $24,000 fully equipped, isn't worth the money, says Ms. Kay. The 39-year-old customer-relations employee at a bank in Brussels says she might switch to the Mini, made by BMW AG, or maybe the tiny Smart roadster from DaimlerChryslerAG's Mercedes division. “The new Golf is really an expensive small car now,” she says.

Ms. Kay's potential defection says a lot about what's plaguing Volkswagen AG, the world's fourth-largest car maker and the latest to stumble into the emergency room. The Golf, VW's profit workhorse, used to be an easy choice for drivers wanting an everyday runaround. As part of a push to turn itself into a maker of high-priced, premium cars, VW loaded the new Golf with expensive extras, assuming loyal customers would trade up. But the Golf's September launch, a critical moment for the company, has been a major disappointment.”

One of the things I noticed while over in the UK recently was how few new Golfs I actually saw on the roads. Knowing this is one of the most popular cars over there is came as quite a shock.

I also think this is also an important lesson for MINI to remember while it's creating the next iteration of the MINI range.

  • Josh

    Why is VW trying to move upmarket? Don't they have Audi for that?

  • kyriian

    it is simple, because vw is trying hard to compete against bmw's 1 series, which by money it is right near bmw's price range

    i think it's sad, that the once affordable simple bone basic golf can turn into such a technology laiden road car

  • Irmiger

    Yeah, what ever happened to the 1984 GTI philosophy? Light, simple, fast, cheap. Oh wait…I'm talking about the Mini aren't I? he.he.

  • I think it's no coincidence that a lot of old VW fans are now MINI owners.

  • Vanwall

    The desire to move up-market is a great motivator for most car companies, often at their own expense. The creation or aquisition of Luxury Divisions seems to be some kind of self-loathing by the Boards of Directors the world over – and the underlying motive is greed because of the potential profits, even if the move is only a few tics up the food chain. I'm all for makin' money, but in an intelligent manner!

    Remember, BMW was a rather schizophrenic company at one time – trying to sell the marvelous but expensive and short-lived 507 that was a mere drop in the bucket of the post-war car boom in Germany, while their bacon was really saved by the mid-level 500 series of re-worked pre-war cars, AND the Isetta, the lowest of lows in the Deutsche car hierarchy. BMW became a mid-level car company by default for a period, with no real luxury division, and survived to move up-market by the skin of their teeth. The real Luxury BMWs had to wait a while.

    Mercedes-Benz wasn't much higher up for a good many years after the war – when my in-laws emmigrated to the USA from Europe in the late '60's, they described MB's as “butchers's cars”, driven by tradesmen, and every taxi seemed to be a mundane diesel Benz. They had a luxury division, yes, but the general level of the car was mid-range. It always struck me as amusing that they carefully avoided ever selling the “stripped” models here in the States, making sure of their profitability to survive in a land dominated by Detroit Iron at that time. Now they're Luxury cars period.

    Which brings us to the new MINI – a premium small car, almost luxurious, very much different in basic philosophy from the original basic-on-a-budget 850, the antithesis of modern BMW thinking.

    BMC was willing to lose money on the original Mini to keep market share, even as an over-engineered marvel, just to sell a lot of cars. Bad business, as they found out. They never made the leap to higher levels successfully, and you couldn't have your base model save your butt anymore, because the very creation of the Mini pushed everyone else to a higher level of basic transportation. The VW Golf is one result of this revolution, shamelessly cadged from the basic Issigonis idea.

    I owned a few Jettas and Passats, and they were good to excellent cars, but every year seemed to be creeping up the price scale. No surprise the Golf is being priced out of it's intended market, as VW has been doing this for years, following BMW and MB's lead. Unfortunately, they are losing buyers at a rate that might mean bad things are in the future. The leap takes hard work, great products, perfect timing and, most of all, luck. I wish them plenty of it, they'll need it.

         BCNU,
       Rob in Dago
    

  • Lucas

    I agree that VW, like most car companies are shifting their cars towards the higher end. The reasoning is clear: they would be able to increase their profit margin. By slowly shifting their cars to the higher end market, they can sell their car for more money with relatively minor cost increases.

    BMW, Mercedes Benz, Toyota and Nissan are among the many car companies that are part of the trend. Toyota, for example has shifted its Corolla and Camery cars from economy to mid-range cars. Likewise, Nissan has moved its Sentra and Maxima from economy and mid-range cars to mid-range and luxury cars.

    However, there is one crucial difference between the European and Japanese car makers in their shifts. The japanese car makers shift the same cars to higher class, but introduces new car models to replace the shifted models. For example, Toyota moved Corolla into econo-midrange class, but introduced the Echo to cover the entry economy class that Corolla once was. The Europeans, however, simply shift their entire line of cars upwards with no replacement in low-end.

    Looks like VW is trying to follow the trend. Strange thing is, VW doesn't do that in Europe. In the Germany, for example, they may have shifted the Golf to midrange. However, they also have the even smaller/lower classed Polo and Lupo series.

    MINI, as many have pointed out, sells in a market similar to VW Golf. As VW shifts the Golf's market placement upwards, they are leaving the original market that made VW Golf so popular to other car manufacturers (such as MINI) to flourish.

    I must admit, though, before I got my MINI, I was giving the VW Golf some serious thought. However, the MINI's distinctiveness in the end wins over VW's somewhat bland but still cute styling.

  • Chris

    Interesting… in europe one would never consider to compare the MINI with the Golf. It's actually always compared with the mentioned Polo or even Lupo (Yuk…), just because of size. Located in Germany, I really don't understand VWs motivation to aim for the higher market?! For example the Phaeton; absolutely unsuccessful, you see this car as rarely as a Lexus here. They do have Audi for the premium customers!? I think there're many people in Germany who would rather buy an Audi A3 than the Golf…

  • Wings

    The Golf situation reminds me of the RX-7 of the mid 90's. The earlier cars were good performers with moderate prices. The later cars were wonderful but Mazda priced themselves out of the market.

  • Jon

    I've leased 2 Volkswagens before purchasing my Mini Cooper S two months ago. The first was a '96 GTI, and the second was an '00 Golf GL. There's something unique and so very functional about the Golf shape. I loved both of those cars, but when my more recent Golf lease ended last month, and the Golf offered in the United States remains unchanged, I would've been buying essentially the same exact car I've been driving for the past 8 years. I don't know why it takes so long to launch the new Golf MkV over in the United States. Perhaps if VW had brought it over here in time, I might've bought a new Golf or GTI. But in the end, the Mini grabbed my attention, and wouldn't let go. In retrospect, I'm really happy with my decision, because I never knew how sloppy and imprecise Volkswagens really were, until I drove the MCS. I don't mind VW going upmarket too much, except with regard to the Phaeton. That car will totally canibalize sales from Audi's A6 and A8. That's a poor business decision, anyone would tell you. In the end, I wish VW success, maybe someday I'll return to their showrooms, but for now, I'm too busy loving life in my Mini.

  • dgszweda1

    I hope BMW is really watching this. I think Mini has a winning formula. The base price for nicely equipped model is quite low. So Mini really sells itself to the crowd looking for a cheaper, economical, and fun alternative that is out there. On the other hand Mini offers a nice range of options (many taken from the higher end BMW brand) and offered them to the consumers that want more. Most of these options can't even be found in other cars at this price range. I think if Mini can keep the base price down low, while offering a lot of nice options for a higher price it will have a winning combination for a long time. It appeals to a very wide segment of individuals. The Golf just comes in too high of a price without thinking of people who don't want all the bells and whistles.

    I really enjoy all the options that Mini offers and the ability to purchase them separately. It provides the ability to really customize the car. This is quite a departure where many cars no longer offer many options (i.e. Honda which really has not options, just different models).

  • Theo

    If memory serves, Smart will be coming to the US in 2006. While not a performance competitor to the MINI/Golf/ market, it will be interesting to see how its introduction, and the ever increasing cost of fuel, affects manufacturers' view of the economy/fun car segment.

    I can see the advertising now… “Dumbfounded by high gas prices? Make the SMART move.”

    FWIW,

    Theo

  • Smart is coming… but they'll be introducing a small four door SUV as their first car in the US. Probably the last thing we need here. Fairly ironic I'd say.

  • Matt

    4 door suv? that's not that horrible Mitsubishi Colt derived Smart is it?

    i was really hoping the Coupe or Roadster would come first.

  • From what I've read on VWvortex, with the introduction of the MK5 Golf VW is bringing over the new Polo.

  • vadr

    Price and market niche is only part of VW's problem: I've owned successively a Corrado, a GTI-VR6 and a GTI-1.8T. The quality level in finish, handling, and fun-quotient diminished markedly with each model.

    The Corrado was a pre-Golf GTI on steroids; the GTI-1.8T is a Plymouth station wagon. I drove a Wolfsberg diesel Golf in France last year and noticed that it was significantly tighter than my 1.8T, leading me to believe that VW no longer supervises its Bazilian plant.

    But regardless of the reason, VW clearly no longer is interested in selling performance cars in the US. MINI now occupies the GTI niche and until VW remembers what its name means, it will continue to turn out second-rate cars. vadr

  • R

    H. Ford said………KISS! (Keep It Simple Stupid!) All this talk about more horsepower and all that nonsense let the after market people deal with that because it can only increase cost…R

  • Has anyone actually read a review of a Smart before they said that they might buy one? http://tinyurl.com/27sm2 and http://tinyurl.com/2o99h .

    The roadster didn't fair any better in the reviews. Unless it's a wholy re-designed Smart, I doubt that the Smart will have much impact on anyone else other than the the ultra trendy/envrio people.

  • I've personally never been that impressed with the Golf . . . Especially not at the new prices…

    http://www.MINIDryvr.Textamerica.COM

  • McBrew

    I don't know about the Golf V in Europe… but here in the states the base MSRP for a Golf is less than a Mini. The MSRP for a base model Golf GL is $15,550 while a Mini is $16,449. They are pretty similarly equipped, too. The Golf has a bit more HP and torque, but the Mini is lighter weight. A recent study found the Golf to be the safest car in it's class. Also, the availability of the TDI engine that yields 50 MPG is something worth noting.

  • Dixon

    i actually own BOTH a VW Jetta 1.8t and a Mini Cooper…

    the VW interior is amazing…contrary to the above comment…i also came from the Corrado, Mk3 VR6 and now the Mk4 Jetta…

    The suspension is where the Mk4's suffer, but easily solved with coils…the MINI is amazing out of the box. ….

    the interior on the MINI is well put together but not on the VW scale

    as for pricing…I am sticker shocked at the difference in pricing from my 2001 to the current 2004…it's 2-3K more now (CDN$).

    I personally think the cars are WORTH the extra few thousand…BUT if you look at AUDI you'll find that you get even MORE for your money in that brand….(ie passat vs A4)….I'm sure I'd end up with an A3 vs a Golf if the A3 was available at the time.

    the TDI is an awesome engine and from what friends looking for one say…sold OUT or hard to get now. VW could really increase sales of MK4's by marketing their TDI even more.

    As for the Mk5…it's a tough call if I'll upgrade when it hits our shores…..I'm leaning towards a Passat (the next one)…but at the prices I EXPECT it to come in at…the A4 is a better value.

    if the POLO is coming…I'm all for the up marketing of the VW brand…I guess I'm getting older and that's what I'm looking for. The extra is worth it…I am still amazed daily with the interior of the Mk4 jetta….a little more higher quality vs commoditization of cars (civic, corolla, camry, accord, etc…)

  • When I bought my '03 MC in '02,I took the time to check out the VWs' in the same price range. However, the one thing that won out MINI over VW was the warranty that MINI stood behind. Unless you're talking about high-end cars,then don't expect that kind of service.

  • Jon

    To vadr's comment about VW not being interested in selling performance cars in the US, I say one word, “R32”. The fastest car VW has ever offered in the US, and it's all about performance. VW sees how fast WRX's and Evo's are flying off the lots, and they want a part of it, thus: the R32. 240 hp, awd, 6-speed, the list goes on. Sure, it's heavy, and no, it doesn't really keep up with the Evo or WRX, but it isn't quite supposed to, according to VW. Anyway, it's a great car, I just saw one in the showroom, but damn, is it expensive! Stickers out at 29k, but good luck actually getting off the lot only paying that!

  • Bill Lawrence

    My wife and I had a 1999 Cabrio. It was piece of junk! It made it's home in the service department. One of my co-workers had a 2000 Jetta that was the same way.

    VW will not get my return business, after the experiences we had with that car. Maybe other folks feel the same way.

  • Tim in MD

    My wife and I both have (had, in my case) Mk4 Golfs…hers is a 2000 Golf GLS 1.8t made in Germany, mine was a 2004 Golf GL 2.0L 2-door made in Brazil. My Golf got sold to CarMax a week ago after 18 months and 26k miles…and a new bottom end to fix massive oil consumption. Brazilian vs. German build makes for two totally different cars. My wife's Golf has 71k on the clock, burns no oil, and has fewer rattles than mine did. She had some problems with a bad mass airflow sensor and recurrent check engine lights, but I think both items were related to the K&N filter element we had installed…after going back to stock paper we've had no more problems (knock on wood). The suspension on both cars went to slop after 20k miles, but it's more of an issue with the power the 1.8T tries to put down…I think we're going to upgrade the suspension on remaining Golf. The quality of interior materials was exemplary on both cars, but I'm willing to trade some quality for the personality of the MINI.

    The sad part is that our extended family loves Volkswagens and have owned quite a few…but the bad stories from friends and co-workers just keep on coming, and the build quality is so hit or miss–especially when you consider different countries of origin. My father-in-law, for example, wants nothing but a Jetta TDI wagon, but is hesitant to buy it given the problems I had with mine.

    I think the bottom line is that I bought the Golf thinking it would be an appliance (as opposed to my other car, a '76 BMW 2002) and it really was more trouble than my the '88 325is with 220k miles I sold before buying the Golf. The lack of excitement in the Golf with 2.0L and stock suspension isn't worth the headaches. I'm willing to accept that I'll be at the dealer from time to time with the MINI in exchange for all it has to offer an enthusiast.

  • Ross Donald

    Having just test driven the new GTI yesterday, I was blown away by a car which I had thought become a ‘has-been’….. this new model is a serious piece of kit. I am now comparing it to an Audi A3 hot spec…..next week….

  • Andrew

    If you don’t like the larger Golf, then there is obviously the Polo (smaller) or the Fox (coming out soon and smaller / less features still)… VW have the market covered. I think it great, superb and brilliant that the Golf went more upmarket!! The new Golf V’s are driving themselves out of dealerships!! I’ve a Golf IV and have sleepless nights over a Golf V GTI – my next!!!