VW plotting Golf sales surge

Volkswagen will leverage the start of improved Golf supplies with a renewed retail offer to spur sales of its seventh-generation small car from May.

That’s the word from Volkswagen Group Australia Managing Director, John White, who this week confirmed the reintroduction of $22,990 drive-away pricing would coincide with freer shipments from Germany.

Volkswagen’s primary plant in Wolfsburg is the only factory to produce the latest Mk7 Golf hatch in right-hand drive form, but the ramp-up of a new plant in Mexico will significantly ease tight supplies of its global small car, especially in Australia.

“As Mexico ramps up, supply will improve dramatically in the second half,” said White, adding: “We’d have sold a lot more if supplies weren’t so tight.”

With 1560 sold in January, 1780 in February, 1250 in March and a similar number expected this month, Australian Golf sales are up 60 per cent so far this year.

While that’s not an accurate gauge of the Golf 7’s success since its predecessor was in run-out in the first quarter of 2013 before being replaced in April, White said Golf sales would start to hit their stride from next month.

“It’s not an apples-with-apples comparison yet,” he said. “It’s not until May that we can begin to compare (Golf 6 versus 7 sales).”

In the year since the Golf 7 hatch was launched, Volkswagen added the new Golf GTI last October, the new Golf Wagon in February and, this week, the new Golf GTI Performance and the latest range-topping Golf R.

Volkswagen expects the latter two performance variants and the standard GTI to account for at least 15 per cent of Golf sales, which is a smaller percentage than before (up to 25 per cent) but is expected to continue its tradition of finding about 2000 homes annually, among a larger mix of mainstream models.

“Overall our Golf business is going up,” said White. “GTI and R will be the same and the GTI Performance brings more opportunity, but we’re selling more entry models and wagons.”

While the entry-level Golf 7 90TSI manual’s list price of $21,490 plus on-road costs ($500 less than base Golf 6 77TSI it replaced) has remained since launch, Volkswagen jacked up prices of upstream models by between $250 and $500 on March 1, when the GTI increased from $41,490 to $41,990.

White said the price hikes were the result of currency fluctuation, but stopped short of saying buyers of higher-spec Golf models were forced to subsidise customers of the entry-level Golf, sales of which have exceeded forecasts.

“I wouldn’t put it that way,” he said.

“The price rises were a conscious decision on our part. Sometimes you’ve got to compensate for exchange rates and inflation. We’ve maintained out entry price points. GTI customers are less price-sensitive.

“We’re trying to compete more head-on with our competitors. We’re selling more mainstream numbers. These are the decisions we have to make. We’re bringing more customers to the brand. (Entry-level) 90TSI sales are much higher than expected as a result.”

When it was launched a year ago, the new Golf was advertised with a base starting price of $24,990 drive-away, which was reduced to $23,990 drive-away in September and then $22,990 drive-away in November 2013, when sales spiked.

White said Volkswagen would reinstate its $22,990 drive-away pricing, which he described as the “sweet spot” to coincide with improved supplies from Germany.

“When we hit the sweet spot with that car at $22,990, sales spiked and it put us more in the mainstream with the Mazda3 and the (Toyota) Corolla. We will make sure we have a competitive entry point to advertise in the coming months.”

Volkswagen hopes to sell about 19,000 Golfs this year – accounting for up to a third of its total sales -- but says it could shift as many as 22,000 given freer supply.

Either figure could hoist the Golf into fourth place in the small-car sales race, behind the Mazda3, Toyota Corolla and Hyundai i30, but ahead of the Holden Cruze and Ford Focus.