Attention: TDR Forum Junkies Volkswagen U. S. Sales Soar as Oil Prices Shift Demand
Sept. 12 (Bloomberg) -- Volkswagen AG's U. S. sales of its namesake brand rose 72 percent in the first 10 days of September as record gasoline prices prompted buyers to trade in sport-utility vehicles for small cars and demand more diesel models, the brand's top U. S. executive said.
The U. S. unit is seeking more diesel engines for the new Jetta car than planned because gasoline price increases and scattered fuel shortages caused by hurricane Katrina are prompting buyers to ask for diesel cars, Len Hunt, the top U. S. executive for the Volkswagen brand, said in an interview. Diesel engines can get 40 percent better fuel economy than gasoline motors.
``There has definitely been a shift moving away from SUVs,'' said Rebecca Lindland, an analyst for Lexington, Massachusetts- based Global Insight Inc. ``People are also more motivated to learn about the new diesels now. There hasn't been a real reason before in the U. S. ''
The U. S. misfortune from Katrina, which initially knocked out 10 percent of U. S. refinery capacity, might benefit Volkswagen, whose U. S. sales have dropped for three consecutive years and were down 17 percent through July. Volkswagen August sales rose 2. 7 percent as buyers began to shun the largest SUVs and flocked to smaller cars.
Shares of Volkswagen rose as much as 77 cents, or 1. 7 percent, to 45. 85 euros and were up 0. 6 percent at 2:20 p. m. in Frankfurt.
``There has been a massive interest in demand for the Jetta diesel,'' Hunt, 49, said. ``Initially we thought diesel demand might be 15 percent of the Jetta sales in the U. S. and it's more than 20 percent already and rising. It was under way before, but Katrina has accelerated it. ''
U. S. Shift
Volkswagen, Europe's largest carmaker, last week said that Hunt will swap jobs next month with Adrian Hallmark, 43, the head of marketing for the luxury Bentley brand, as the company tries to reverse losses and sales declines in the U. S. Hunt is in Germany this week for the Frankfurt International Motor Show.
Volkswagen lost 1 billion euros ($1. 24 billion) last year in the U. S. , the world's largest automobile market. Chief Executive Bernd Pischetsrieder said Aug. 24 the carmaker is unlikely to turn a profit there until at least 2007 because of pricing pressures and the dollar's decline against the euro. The jump in gasoline prices will help the German automaker's new models, Hunt said.
Americans are paying more for their gasoline after adjusting for inflation than at any point since 1981, during the Iran-Iraq war, and prices may keep climbing, Charles Maxwell, senior energy analyst at Weeden & Co. in Greenwich, Connecticut, said last week.
Fuel Prices
The average U. S. retail price jumped 45 cents the week of Sept. 29 to $3. 057 a gallon, according to AAA, the largest motorists' organization. Gasoline prices in 1981, after the revolution in Iran and during that country's war with Iraq, equaled $3. 14 in today's dollars.
Oil refinery shutdowns initially idled more than 1. 77 million barrels a day of capacity, or 10 percent of the nation's total, according to Energy Department data, after Katrina slammed into the coasts of Louisiana, Mississippi on Aug. 29 with 140 mph winds. Four refineries were still down last week.
Buying trends indicate that people who don't normally consider diesel are switching, Hunt said. Volkswagen was caught short of diesel Jettas with automatic transmissions because traditional diesel buyers prefer a manual gearbox, he said. Many of the new buyers are first-time diesel owners, Hunt said.
In Texas, the state with among the largest U. S. concentration of pickup truck buyers, the percentage of Jettas sold with diesel engines has more than doubled in the last several months, to about 30 percent, Hunt said.
Diesel Mix
Volkswagen is also testing diesel models to see if they can operate properly using diesel fuel that is composed of 20 percent renewable components such as soybean oil, Hunt said. Current models are only approved so-called biodiesel with 5 percent of the crop additives, he said. Adding more vegetable oil to diesel would require less petroleum, he said.
DaimlerChrysler AG's Dieter Zetsche, who will take over as chief executive in January when Juergen Schrempp retires, has said U. S. demand for Jeep Liberty SUV and Mercedes E-Class sedan with diesels was already exceeding initial expectations before the hurricane as gasoline prices rose. Zetsche was head of Chrysler and now leads the Mercedes Car Group.
Mercedes sold 470 diesel versions of the E-Class in August, a ``significant'' increase from the 250 to 300 diesel models it normally sells, U. S. Mercedes chief Paul Halata said in an interview today. He credits the oil shock of the 1980s with helping attracting U. S. buyers to Mercedes in the first place and at one point driving diesels to 70 percent of U. S. sales.
``Diesel has to be part of the answer and this will speed it up,'' he said, adding that he also plans to speed up plans to get more diesel engines in U. S. models. He didn't provide a timetable.
To contact the reporter on this story:
Jeff Green in a the Frankfurt International Motor Show 4470 or jgreen16@bloomberg.net;
Last Updated: September 12, 2005 08:25 EDT
http://www.bloomberg.com/apps/news?pid=10000100&sid=aPxFRzxinfkg#
Sept. 12 (Bloomberg) -- Volkswagen AG's U. S. sales of its namesake brand rose 72 percent in the first 10 days of September as record gasoline prices prompted buyers to trade in sport-utility vehicles for small cars and demand more diesel models, the brand's top U. S. executive said.
The U. S. unit is seeking more diesel engines for the new Jetta car than planned because gasoline price increases and scattered fuel shortages caused by hurricane Katrina are prompting buyers to ask for diesel cars, Len Hunt, the top U. S. executive for the Volkswagen brand, said in an interview. Diesel engines can get 40 percent better fuel economy than gasoline motors.
``There has definitely been a shift moving away from SUVs,'' said Rebecca Lindland, an analyst for Lexington, Massachusetts- based Global Insight Inc. ``People are also more motivated to learn about the new diesels now. There hasn't been a real reason before in the U. S. ''
The U. S. misfortune from Katrina, which initially knocked out 10 percent of U. S. refinery capacity, might benefit Volkswagen, whose U. S. sales have dropped for three consecutive years and were down 17 percent through July. Volkswagen August sales rose 2. 7 percent as buyers began to shun the largest SUVs and flocked to smaller cars.
Shares of Volkswagen rose as much as 77 cents, or 1. 7 percent, to 45. 85 euros and were up 0. 6 percent at 2:20 p. m. in Frankfurt.
``There has been a massive interest in demand for the Jetta diesel,'' Hunt, 49, said. ``Initially we thought diesel demand might be 15 percent of the Jetta sales in the U. S. and it's more than 20 percent already and rising. It was under way before, but Katrina has accelerated it. ''
U. S. Shift
Volkswagen, Europe's largest carmaker, last week said that Hunt will swap jobs next month with Adrian Hallmark, 43, the head of marketing for the luxury Bentley brand, as the company tries to reverse losses and sales declines in the U. S. Hunt is in Germany this week for the Frankfurt International Motor Show.
Volkswagen lost 1 billion euros ($1. 24 billion) last year in the U. S. , the world's largest automobile market. Chief Executive Bernd Pischetsrieder said Aug. 24 the carmaker is unlikely to turn a profit there until at least 2007 because of pricing pressures and the dollar's decline against the euro. The jump in gasoline prices will help the German automaker's new models, Hunt said.
Americans are paying more for their gasoline after adjusting for inflation than at any point since 1981, during the Iran-Iraq war, and prices may keep climbing, Charles Maxwell, senior energy analyst at Weeden & Co. in Greenwich, Connecticut, said last week.
Fuel Prices
The average U. S. retail price jumped 45 cents the week of Sept. 29 to $3. 057 a gallon, according to AAA, the largest motorists' organization. Gasoline prices in 1981, after the revolution in Iran and during that country's war with Iraq, equaled $3. 14 in today's dollars.
Oil refinery shutdowns initially idled more than 1. 77 million barrels a day of capacity, or 10 percent of the nation's total, according to Energy Department data, after Katrina slammed into the coasts of Louisiana, Mississippi on Aug. 29 with 140 mph winds. Four refineries were still down last week.
Buying trends indicate that people who don't normally consider diesel are switching, Hunt said. Volkswagen was caught short of diesel Jettas with automatic transmissions because traditional diesel buyers prefer a manual gearbox, he said. Many of the new buyers are first-time diesel owners, Hunt said.
In Texas, the state with among the largest U. S. concentration of pickup truck buyers, the percentage of Jettas sold with diesel engines has more than doubled in the last several months, to about 30 percent, Hunt said.
Diesel Mix
Volkswagen is also testing diesel models to see if they can operate properly using diesel fuel that is composed of 20 percent renewable components such as soybean oil, Hunt said. Current models are only approved so-called biodiesel with 5 percent of the crop additives, he said. Adding more vegetable oil to diesel would require less petroleum, he said.
DaimlerChrysler AG's Dieter Zetsche, who will take over as chief executive in January when Juergen Schrempp retires, has said U. S. demand for Jeep Liberty SUV and Mercedes E-Class sedan with diesels was already exceeding initial expectations before the hurricane as gasoline prices rose. Zetsche was head of Chrysler and now leads the Mercedes Car Group.
Mercedes sold 470 diesel versions of the E-Class in August, a ``significant'' increase from the 250 to 300 diesel models it normally sells, U. S. Mercedes chief Paul Halata said in an interview today. He credits the oil shock of the 1980s with helping attracting U. S. buyers to Mercedes in the first place and at one point driving diesels to 70 percent of U. S. sales.
``Diesel has to be part of the answer and this will speed it up,'' he said, adding that he also plans to speed up plans to get more diesel engines in U. S. models. He didn't provide a timetable.
To contact the reporter on this story:
Jeff Green in a the Frankfurt International Motor Show 4470 or jgreen16@bloomberg.net;
Last Updated: September 12, 2005 08:25 EDT
http://www.bloomberg.com/apps/news?pid=10000100&sid=aPxFRzxinfkg#
