Volkswagen Doesn't Do It Again

For years, I have eagerly awaited the day Volkswagen would finally offer its smallest model, the Polo, here in the United States, which seemed unlikely given the continuing preference Americans have for big cars, particularly SUVs. But recently, with the growing interest in small cars like the Honda Fit and the Toyota Yaris, not to mention the increasing talk in a "green" future of environmental friendliness, it suddenly seemed very possible, and Volkswagen seemed ready to offer it here at last.

It was yet another mirage. Up until last month, I'd been waiting to see if the Polo - now the second smallest VW in the make's lineup - would finally make it, but when it became apparent that nothing seemed to be moving on that front, I bought a new Golf instead. Two weeks after I bought my Golf, Volkswagen of America announced that it was bringing neither of its subcompacts, the Polo or the smaller Up!, to North America (the U.S. and Canada) any time soon.

The reasons for not bringing these cars boiled down to costliness and greater priorities for Volkswagen of America. Jonathan Browning, Volkswagen of America's CEO, explained that the profit margins on subcompacts are too thin for VW to import them from Europe and also too risky for VW to build them in Mexico. Right now, VW is only a bit player in the U.S. market and is trying to become once again the major import brand it was back when Lyndon Johnson was President. In order to reach its "8 in 18" goal - 800,000 cars sold per year by 2018 - VW has to spend its money and resources in upgrading its supply chains, training its dealers, and - most importantly - expanding its dealer network. Forty years ago, Volkswagen had over 1200 dealers in the United States, but intense competition from the Japanese halved that number over time. VW says it simply has too much on its plate in North America to try and sell here subcompacts that it fears would lose money when the firm is trying to make money on this continent.

There's one silver lining. The fluctuating price of fuel in the U.S. and Canada could suddenly make subcompacts desirable, and VW could theoretically "bring the Polo here tomorrow" if need be, Volkswagen product planner Rainer Michel told Car and Driver magazine. Adding at least the Polo is still a distinct possibility, but for now, the company has decided that the Golf is small enough for the New World.

I'm skeptical, of course. Back when VW was content to be a niche marketer in the U.S. and Canada, selling inexpensive European cars in North America at a time when no one else did and moving about 300,000 cars a year, the company could have easily sent over the Polo here and limited its availability to avoid having more Polos on the lots than it could sell. There is a market here in America for the Polo (the Up! ? hard to say), and VW doesn't have to sell a lot of them to satisfy it. How much money could VW lose on them, especially with the Civic/Cobalt/Corolla -inspired Jetta selling like gangbusters? Okay, so maybe I'm wrong. Maybe satisfying a small demand does cut into profitability. (The BMW-built Mini? Never mind that.)  But when I hear the latest news from Volkswagen that neither the Polo nor the Up are coming here, only to hear the promise of adding them to the lineup at a later date, I have the same reaction that I have when a new high-speed rail initiative is announced: "I've heard it all before."

My guess is that VW, having tried a subcompact model in America with the Brazilian-built Fox a quarter century ago, is far more cautious after that car - which the late Volkswagen of America executive James Fuller said could "be the appetizer for a lifetime of buying Volkswagens" - turned out to be such a sales disaster. If that's the case, then Volkswagen AG and Volkswagen of America have learned the wrong lesson. The Fox was a crude, antiquated, basic automobile. The Polo is none of those things. Furthermore, the Fox came to this country without an optional automatic transmission, because the parent company told Volkswagen of America that such an option was unnecessary - an assessment that completely missed the traditional American ambivalence toward stick shifts. The Fox was discontinued in 1993, VW's worst sales year ever in America; there hasn't been a subcompact in the American lineup since.

I have to hope that VW knows what it's doing. And in forsaking subcompacts in order to rebuild its North American network, it probably is. Volkswagen may very well have to get back to where it was in America in 1968, the Beetle's best year in the U.S., in order to satisfy smaller demands for smaller cars, and that's important after losing so much U.S. market share over the years to the Asian and domestic automakers. "What an auto company loses in the market today," Volkswagen's then-chairman Heinz Nordhoff said in 1963, "it probably can't recover in the next fifty years." Now how many years separate 2018 from 1968?

In the meantime, here's a picture of the latest iteration of the Polo, the VW we in the New World can't have.