Volkswagen's Million-Car U.S. March Off to Slow Start

There's good news, and there's good news, Volkswagen (VLKAY.PK) style.

The German automaker announced last year that it wants to sell 1 million cars a year in the U.S. by 2018. That goal took a detour when sales slipped in 2009. But at a recent VW investor presentation, that wasn't the story.

Instead, VW emphasized how much its brands "overperformed." In plainer terms, its U.S. sales were bad, but the competition did worse.

According to AutoData Corp., sales for the VW Group, which include Volkswagen, Audi, Bentley and Lamborghini, fell 5.2 percent in 2009 to just under 300,000. U.S. sales as a whole fell much more, 21.2%, to 10.4 million.

VW's performance translates to a half-percentage-point higher market share for, up to 2.9 percent of U.S. sales. But in terms of its push for higher U.S. volumes, 2009 was a wrong turn for VW.

It's possible that the German automaker has corrected course. Through the first two months of 2010, VW Group sales were around 49,000, up 36 percent from the year-ago period.

Next year is supposed to be VW's first big growth year in the United States, as VW gets a new factory in Chattanooga, Tenn. up to speed. The Tennessee plant is slated to open in 2010, with production of a yet-unnamed midsize car starting in 2011. VW is also expanding production of several other models at existing assembly lines in Mexico.

VW has ambitious growth plans around the world, including China, which the company called VW's "second home market." China passed Western Europe in 2009 as VW's biggest-selling market, the company said.

On the factory side, VW is developing what it calls "modular toolkits" that allow VW's mass-market and luxury brands to share more of the same components, and therefore costs, under the skin.

Putting a tough year aside - and 2009 was just that, regardless of the spin - VW is still determined to become a million-selling U.S. brand.

Chart: VW