Pocket Full of Miracles: VW Needs Divine Assistance to Hit 1 Million U.S. Sales

It's going to take a few miracles for Volkswagen (VLKPY.PK) to hit its stunning target of 1 million sales annually in the United States by 2018, for the VW and Audi brands combined. That would be more than triple the current VW sales level, and far more than VW's all-time U.S. record of close to 600,000 way back in 1970.

There are probably a lot more, but here are three miracles Volkswagen needs to achieve its goal.

Miracle No. 1. The U.S. market needs to goes back to a historically spectacular level of auto sales, soon. From 1999 to 2007, U.S. auto sales never fell below 16 million units a year. There was a lot of loose talk in the industry in the early 2000s that the traditionally volatile, cyclical nature of auto sales had been "repealed." That is, until U.S. auto sales started to sag after 2004, then plunged to 10.4 million last year.

If VW is going to have a prayer of reaching 1 million units, the U.S. market as a whole has to come back. However, today's talk in the industry is about a "permanent" downsizing, where Americans have quit trying to jam every driveway with three or more cars per household.

I'm skeptical that conspicuous consumption will remain out of fashion. However, there's no way VW can buck the trend and triple sales if the rest of the market is down or in slow-growth mode.

Miracle No. 2. The competition needs to stand still. Toyota (TM) has stumbled badly, but deep down, Toyota DNA is about learning from its mistakes. Toyota will be back. Honda (HMA) has a reputation for environmental friendliness that won't fade any time soon. Nissan (NSANF.PK) is rolling out the first relatively high-volume, battery powered electric vehicle, the Nissan Leaf.

At the same time, Ford (F) and General Motors have gotten their acts back together in terms of their newest products. Chrysler also is hanging in there all of a sudden, in terms of U.S. sales. All three domestic rivals are filling the new product pipeline with expressively styled, fuel-efficient small cars, with relatively upscale features and content, and sharper ride and handling than traditional domestic cars. Sounds sort of like Volkswagen, doesn't it?

The competition is not sitting still. If anything, it's bearing down in VW's direction.

Miracle No. 3. Americans need to fall in love with diesels. VW is diesel-heavy in Europe. It's not doing badly in the United States with the diesel Jetta wagon, either. However, it's one thing to fill a niche and another to take diesel mainstream. That's going to require a lot of Americans to forget what they remember about the smelly, smoky, underpowered diesels of the 1980s. Modern, clean-burning diesels are none of those things, but most Americans don't know it yet. The last time diesels dominated sales for German imports, it was thanks to two oil embargoes and diesel fuel that was cheaper than gasoline.

So could VW do it? If it does, it will require a lot of help.

Photo: Volkswagen