Volkswagen leaving Detroit for D.C.

[Flybrian]

Volkswagen Moving to D.C. Area
Dulles corridor headquarters to be announced Thursday

by Paul A. Eisenstein | Link to Original Article @ TCC | (2007-09-03)

Barring a last-minute delay, Volkswagen of America will announce plans to move its headquarters to the Washington, D.C. suburbs, during a news conference several well-placed VW sources tell TheCarConnection.com will be held on Thursday.

Rumors of the move have been circulating for several months, while company officials were meeting with representatives of several East Coast states in a bid to come up with the best possible incentives to help finance such a move. At various times, reports have suggested, the German automaker considered not only the Washington area, but also North Carolina, and New Jersey, where it was headquartered during its early years in the U.S.

"There's a whole laundry list" of reasons behind the move, said one senior insider, confirming that the company now plans to relocate to the Dulles corridor, a fast-growing strip of housing and corporate headquarters near the District's largest airport, Dulles. A wide range of businesses have set up shop in that area in recent years, including numerous high-tech firms, such as AOL.

Specifics of the move are being guarded, though it appears that all of VW's U.S. operations, which includes such brands as the flagship VW, high-line Audi and the ultra-luxurious Bentley, will all move from the Detroit suburb of Auburn Hills.

"This has been brewing for some time," said a second VW source, noting that the German marquee has been extremely unhappy with the performance of its American operations. According to one trade publication, VWoA's various operations lost a combined $1.1 billion in 2005 and $795 million in 2006 in North America. Another put the five year deficit at more than $3.4 billion Euros, about $2.4 billion at the current exchange rate.

Of course, the increasingly lopsided exchange rate has certainly been a part of VW's problems, since it continues to import all of its vehicles from Europe, Mexico and other parts of the world.

But the maker is convinced that staying based in the Detroit suburbs would make it difficult to turn things around, insiders have told TheCarConnection. The corporate stand is that VW needs to break free from what one executive called the "Big Three mindset," and start connecting with buyers in places, such as the East Coast, that are more import-minded.

The loss of VW would be another setback for the Detroit region, which has been slammed by years of cutbacks in the auto industry. The automaker employs more than 1,500 workers in the Motor City and, if past history is any indication, a sizable share of them would decline to relocate. Something close to 70 percent of Nissan's workforce failed to follow the Japanese maker when it moved from suburban Los Angeles to Nashville. TN, last year.

But that is apparently part of VW's plans. The automaker hopes to use the move to sharply reduce what it sees as a bloated workforce, including many employees with the wrong sort of mindset needed to shift directions.

"I can't really see this working," contends a long-time VW executive who left the company two years ago to pursue "other options." The big problem, he asserted "is not the Detroit mindset, but the German way of thinking. We spent years trying to get (corporate headquarters in) Wolfsburg to understand the very different needs of the American market and they just wouldn't go along."

Unless that changes, the one-time executive argued, nothing will change, no matter where VW relocates.

As TheCarConnection reported earlier this year, however, VW has begun to acknowledge the need to treat the U.S. market differently than Europe, and is in the midst of developing products for the American consumer. It is unclear whether additional details of that program will also be revealed later this week.

[The O.C.]

Makes sense.....leaving Detroit.

I'm surprised they didn't land in Atlanta......close to Porsche, lower cost-of-living than D.C. (even Detroit) and a quite-desirable place to live........

[balthazar]

Every spare dollar VW can get it's hands on should be put towards building better, longer-lasting vehicles, first-n-foremost. Fix the bread-n-butter models first, and stop wasting millions on pie-in-the-sky concepts that aren't going anywhere. Moving the offices will do NOTHING to address VW's problems. That's like your house catches on fire, you pack everything you own... still on fire... into a moving truck and drive to another neighborhood and set-up there, then you call the fire department. Maybe.

[Oracle of Delphi]

I'm surprised they are not moving back to Germany and pulling out of USA totally.

Edited September 5, 2007 by Pontiac Custom-S

[VenSeattle]

I'm surprised they are not moving back to Germany and pulling out of USA totally.

Stopgap? Reduce corporate staff voluntarily by an est 70% then pull out?

[pow]

If VW wants to be a mainstream seller in the US, they have to adapt products to local tastes/trends, like they do in South America or Asia. The Passat, Jetta, Touareg, Eos... they're all a half-segment too high.

And they actually need to ship cars here if they expect us to buy them. The demand for Rabbits, for instance, is much greater than inventory.

[A Horse With No Name]

I'm surprised they are not moving back to Germany and pulling out of USA totally.

Exactly. They have such a bad rep here they might be better off pulling out.

Chris

[A Horse With No Name]

If VW wants to be a mainstream seller in the US, they have to adapt products to local tastes/trends, like they do in South America or Asia. The Passat, Jetta, Touareg, Eos... they're all a half-segment too high.

And they actually need to ship cars here if they expect us to buy them. The demand for Rabbits, for instance, is much greater than inventory.

The Rabbit has some nice fit and finish but the Audi 5 Cyl they use in it has piss-poor fuel economy and the electronics in them just suck ass to no end.

Chris

[pow]

The Rabbit has some nice fit and finish but the Audi 5 Cyl they use in it has piss-poor fuel economy and the electronics in them just suck ass to no end.

Chris

For 2008, they get 170 hp/177 lb-ft, which makes up slightly for the poor fuel economy, which is also improved (or less affected by the new EPA procedures). It's now the same as the four-cylinder Mazda 3 2.3's.

But I agree, the new 160 hp 1.8 TFSI I4 would have been better (and more pricey). Ditto the 150 hp 2.0 FSI, which comes from a family of 40 million made.