Volkswagen is digging deeper into efforts to turn around its U.S. operations with a new product strategy centered on full-size SUVs and pickup trucks potentially built in partnership with Ford.
The details: The move is aimed at positioning the German automaker in higher-margin vehicle segments amid mounting pressure from stakeholders to get its U.S. business back on track, according to Reuters.
VW's first pickup truck is expected to hit the market before the end of the decade and be built in the U.S., according to a source.
The automaker currently doesn't offer a pickup truck or full-size SUV in its U.S. lineup, with its largest vehicle being the midsize Atlas.
Why it matters: Expanding into full-size SUVs and pickups could give VW dealers access to two of the most lucrative segments in the U.S. market, potentially broadening the brand's customer base and creating new opportunities to improve sales and profitability.
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Not to mention: Betting on large SUVs and pickups could make sense for Volkswagen given their continued popularity and higher price points, with Ford emerging as the most likely partner to build the VW pickup due to the automakers' existing partnership, per Reuters.
Pickup trucks accounted for nearly 20% of U.S. vehicle sales last year, according to Cox Automotive, with large pickups from Ford, GM, and Ram dominating the market.
Those larger trucks had average sticker prices of nearly $70,000 last year, while the average transaction price (ATP) for full-size pickups rose 2.1% year over year in June, according to Cox.
Bottom line: Volkswagen's potential push into full-size SUVs and pickups represents a major shift in its U.S. product strategy, giving dealers a potential opportunity to compete in higher-margin segments that have long been dominated by domestic brands.
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