VW Takes Aim at Toyota to Turn U.S. Profit With Jetta

Volkswagen AG plans to cut the U.S. price and increase the size of the Jetta compact car, its best-selling model in the country, as the automaker aims to make its U.S. operations profitable by 2013, reported Bloomberg.

The revamped Jetta will be about 3.5 inches longer and about $1,700 less than the current version when U.S. sales start in October, the Wolfsburg, Germany-based company said in a statement. A hybrid version will sell in two years.

Volkswagen, Europe’s largest automaker, is shifting more production to North America to help trim costs and compete with small-car leaders Toyota Motor Corp. and Honda Motor Co., Stefan Jacoby, chief executive officer of VW’s U.S. unit, said yesterday in an interview. The company is aiming to almost double sales in the market by 2012, to 400,000 units for its namesake brand, compared with 213,454 vehicles last year.

“Model by model, our lineup will be competitively priced so that we will be able to compete in the American market,” Jacoby said yesterday at a press briefing to introduce the car in New York.

Moving more production to North America from Europe provides Volkswagen with a hedge against currency fluctuations and shaves costs, Jacoby said. He restated the company’s goal for North American output to rise to 75 percent of sales in the region by 2013 from about 60 percent last year.

Volkswagen will be completely independent of the euro- dollar exchange rate by 2012 or 2013, and the U.S. business will be profitable by then, Jacoby said. The German company, which reported a profit of 960 million euros ($1.18 billion) last year, doesn’t break out results for the U.S., and Jacoby declined to give specifics for how much the business lost in the market last year.

Volkswagen plans to sell the 2011 Jetta for about $16,000, down from the current base of $17,735. That would bring the model closer to the starting prices of Toyota’s Corolla and Honda’s Civic, now $15,450 and $15,455, respectively, according to the companies’ websites.

“They’re going after big-volume products,” Jeff Schuster, executive director of global forecasting at market-research firm J.D. Power & Associates in Troy, Mich., said in a telephone interview.