Volkswagen Golf 7.5 heralds rush of new models

Volkswagen has presented its upgraded Golf 7.5 to the local press during a comprehensive drive program east of Melbourne, but some customers may have to wait a while before they get behind the wheel.

The problem of balancing supply and demand is true of any successful brand, but it's becoming chronic for Volkswagen in Australia.

While the importer won't discuss its forward orders for the small car, VFACTS figures for 2016 show a marked drop in sales for the brand, year on year. Volume-selling model lines, the Golf, Tiguan and Polo, were largely responsible for the sales slump – with a total of 56,571 units in 2016 representing a difference of 3654 lost sales, year on year. That could be a sign of buyers anticipating the arrival of new models and delaying their purchases for the launch of the new car.

Some of the lower sales could also be related to improving competition in each market segment, or the Dieselgate scandal, or Volkswagen's run-out program – in the specific case of the Tiguan. A careful importer will time its run-out for supply of the old car to be practically exhausted in time for the new car's arrival, but supply of the Tiguan may have fallen short of the mark – and the new model's production output hasn't yet caught up with pent-up demand.

The second-generation Tiguan arrived here in September last year and had sold 3399 vehicles by the end of the year. Combined with the 2575 units of the older series in run-out, total Tiguan sales for 2016 numbered 5974 units. For 2015, total Tiguan sales peaked at 6334. So even with the disruption of run-out and ramping up new model supply and sales, the SUV only fell short of its previous year's tally by about 360 vehicles sold.

Presumably Volkswagen Australia expected significantly higher sales of the larger new Tiguan to offset lower sales of Golf and Polo. Those added sales haven't materialised, due in large part to supply-side constraints.

Jeff Shafer, Volkswagen Australia's Product Marketing Manager, was asked by motoring.com.au whether the supply imbalance was a question of the importer restricting stock to keep customers keen, or whether it was a case of failing to appreciate the demand for the new SUV.

"A bit of both," Shafer admitted, further noting that car companies generally, not just Volkswagen, like to keep "hungry buyers" on the hook. The Tiguan has been in short supply in Australia since the launch of the new model. And Shafer says that unexpected demand in Europe for the new SUV is the root cause of that.

Even now, nearly six months later, the Tiguan 162 TSI remains in high demand. Customers placing an order today for the Tiguan with the Golf GTI engine will be waiting until year's end for the car to be delivered, Shafer revealed during the launch of Golf 7.5.

"It takes a while for the production cycle to pick up," Shafer told motoring.com.au.

His example of that was the R-Line pack for the Golf Highline. It's supplied as individual components from different third-party suppliers, who are all locked into different delivery timelines and logistical parameters, so manufacture of the Golf to this specification could be delayed by supply-chain issues not fully within Volkswagen's control.

And even if Volkswagen could demand of its various suppliers that they ramp up parts production to meet and exceed demand, and the factory could arrange an additional shift, there's the danger that forward projections could be wrong – and the demand may not be there after all, leaving the importer and distributor with acres of stock to clear. Or the initial demand might dissipate suddenly, again leaving the importer with excess stock. Some buyers, unable to purchase a Tiguan or a Golf in a reasonable timeframe may look at other brands with competitive product, leaving Volkswagen holding more stock than desirable, after accelerating production to meet the initial demand.

In run-out mode for the year to date, the Golf 7 is nearly 2000 sales behind its June figure for 2016 – and that was nearly a thousand sales short of the June 2015 figure. Yet the importer still sold over 2200 last month. It begs two questions: how many of the superseded car remain in dealer stock? And has Volkswagen Australia properly balanced run-out against the new model's uptake?

New Volkswagen products headed to Australia in coming months include the Golf GTI and Golf R next month, the Arteon 206 TSI in October and the Tiguan Allspace in the first half of 2018. Also set to arrive here in the early part of 2018 is the all-new Polo, which will grow in size to about the same dimensions as the Golf 4 from the late 1990s. Volkswagen Australia says it will be crammed full of new technology and will be built on the MQB platform, just like the Golf.

And if it – or any of the other models coming here soon – shapes up to be a commercial success, the wait for the Polo will be long and protracted. It's unfortunately a side effect of having a hot property to sell, says Shafer. And disappointing customers is probably a better outcome for the importer as a business than being left with the liability of a massive stock surfeit.

"We want to be ambitious," Shafer concluded, "but we don't want to be foolish."