Please ensure Javascript is enabled for purposes of website accessibility

Is Volkswagen Finally Getting Serious About SUVs?

By John Rosevear - Feb 27, 2016 at 8:15AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

As sales of “crossover” SUVs have boomed, VW’s sales in the U.S. and China have lagged. But now, VW’s new CEO is about to try to turn that around -- starting with a brand-new small Volkswagen SUV.

VW released a "teaser" photo of a new small SUV that it will unveil in Geneva next week. Image source: Volkswagen

Even before Volkswagen's (VWAGY 0.11%) sales began to suffer in the wake of revelations that it cheated on emissions tests, the company was losing ground to key rivals in important markets around the world.

Why? Because more and more car-buyers want SUVs -- and VW doesn't have very many. 

But this past week, the company signaled that it's about to work on changing that. First up: A new small Volkswagen crossover SUV.

A concept vehicle to kick off a "broad SUV offensive" for VW
VW said that it will unveil a "concept" version of a new subcompact SUV at next week's Geneva International Motor Show in Switzerland. By calling it a "concept", VW is signaling that it might not go into production exactly as shown. But the company did make it very clear that several new Volkswagen SUVs are on the way to market.

We don't yet know much about the SUV that VW plans to reveal next week. The company released the "teaser" shots you see here, along with just a tiny bit of detail. 

Here's what VW said, in its typical flowery translated-from-German language:

"[VW] presents a fascinating concept car, which will liven up the compact car class as a trendy, affordable SUV. The concept car, expressive of a lifestyle, can be seen as the beginning of a broad SUV offensive, stating a new automotive attitude to life while remaining perfectly suited for everyday use. 

"With this, Volkswagen gives a realistic perspective on a completely new model series and at the same time on the future production model. Its operating concept features hardly any switches, creating a conceptual bridge to the BUDD-e, which amazed an international audience at the CES in Las Vegas."

The VW BUDD-e was another concept revealed by VW in January.

The Volkswagen BUDD-e concept is an idea of what a futuristic battery-electric VW Microbus might be like. It was shown at the Consumer Electronics Show in Las Vegas in January. Image source: Volkswagen

What's it mean?
It means that despite the diesel scandal, VW CEO Matthias Mueller is determined to press on with new products that will help bolster the company's product lineup around the world. 

A new small Volkswagen SUV could be very important to the company especially in Europe, where small car-based crossover SUVs like the Renault Captur and General Motors' (GM 1.35%) Opel Mokka (a twin to the hot-selling Buick Encore) have been racking up big sales numbers at the expense of the small sedans that European drivers (and VW) have traditionally favored.

Another "teaser" photo showing part of the new VW SUV. Image source: Volkswagen

It should also help in China, where similar trends favoring SUVs have given VW's regional arch-rival General Motors a boost at the German giant's expense as GM's latest SUVs have caught on with Chinese buyers. And it'll give VW a new contender in the SUV-crazy U.S., where the company can use all the help it can get.

The upshot for VW shareholders
Generally speaking, the new generation of car-based "crossover" SUVs are more profitable than the sedan models they're typically based on. While VW's luxury Audi brand has a full line of well-regarded (and strong-selling) crossovers, the mass-market VW brand itself hasn't been much of of a player in the global shift toward crossover SUVs. 

I expect that Mueller and the VW brand's leadership will use the concept vehicle in Geneva to signal a strong move toward this lucrative corner of the global auto market. But in the end, as ever in the auto business, it'll come down to this simple formula: If the new VWs are good products, sales and profits will follow. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Volkswagen Aktiengesellschaft Stock Quote
Volkswagen Aktiengesellschaft
VWAGY
$18.24 (0.11%) $0.02
General Motors Company Stock Quote
General Motors Company
GM
$32.19 (1.35%) $0.43

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.