Volkswagen’s struggle to sell cars in the US continues with the automaker’s latest data showing sales have plummeted another 17.2% in May.
For the year, VW sales are down more than 13% compared to last year.
But buried in all this lousy sales data is one bright spot: Sales of its compact Tiguan crossover is surging.
According to VW, the company sold 43% more Tiguans last month than it did during same period in 2015. So far this year, the Wolfsburg-based company has moved roughly 17,500 units of its compact crossover – an increase of 58% over the start of 2015.
For those who have paid attention to the VW sales saga over the past few years, this is a stunning turn of events. For much of the time since its US debut in 2009, the Tiguan has been viewed as a major flop for Volkswagen. In fact, the Tiguan’s inability to gain traction with buyers in a market craving crossover SUVs has been widely viewed as one of the driving factors for the company’s struggles in the country.
But with sales of VW’s volume leading Passat down 24% this year and the traditionally strong-selling Golf and Jetta family of cars down 11.6% and 11.2%, the Tiguan is now the company’s lone shining star.
Why the sudden sales surge?
One explanation lies with the fact that the compact crossover/SUV market is booming. Through April, the segment represents 16.7% of all cars sold in the US. If you include models from the luxury brands, that number rises to 19.8%. This means that one out of every five cars sold in the US this year, has been a compact crossover/SUV of some sort.
A second explanation lies with the Tiguan’s product cycle. The current first generation Tiguan debuted nearly a decade ago and is based on VW’s previous generation Golf/Jetta. Last year, Volkswagen unveiled a new second generation model that’s set to arrive in US showrooms in 2017.
As a result, the company has offered some very generous sales and leasing incentives to help clear out its inventory. In some areas of the country, leases for base level Tiguans were available for as low as $99 a month. As a brand, VW’s transaction prices are down 5% this year.
Thus, buyers who would have been turned off by the Tiguan’s higher price point stuck around to complete their purchase rather than defect to more affordable alternatives from US, Japanese, or Korean brands.
However, the Tiguan’s success has to be tempered by some context. The 17,500 cars VW has sold this year still pale in comparison to the 139,000 RAV4’s that have left Toyota showrooms this year.
The second generation Tiguan is expected to be built at VW’s Puebla, Mexico plant and will be available with three-row seating next year.