Volkswagen's American assembly plant: fahrvergnugen was not enough - international marketing

Business Horizons, Nov-Dec, 1992 by William Beaver

There is, however, more to the Rabbit's swift decline than external factors. Most important, the Rabbit quickly gained a reputation of being more expensive than but not as reliable as the competition. It seemed that some of the reliability problems of the German-built Golf had followed the car to America. For instance, defects in the fuel injection and emission systems, as well as oil consumption problems, resulted in recalls. Notwithstanding, James McLernon pointed out that not one major recall of the Rabbit was ever traced to the Westmoreland plant. On the other hand, the Rabbit did suffer from early quality control problems. Too many cars were assembled with defects and shipped to dealers. In another interview, McLernon admitted, "Quality just wasn't up to our standards for a while" (Bennet 1981). Quality did improve to the point at which cars produced at Westmoreland were as good as those produced in Germany. As late as March 1982, Consumer Reports stated that the Rabbit was superior to the competition in terms of handling, acceleration, braking, and interior room. But it also reported it could not recommend the car because of so many past mechanical problems.

The Rabbit's early reliability problems should not be that surprising. For years the Big Three had often experienced problems with new cars in existing plants with an experienced labor force. The conventional wisdom was that it just took time to eliminate the defects. In fact, it should be pointed out that the Rabbit was not a bad car by traditional standards; it was just that the automotive world had changed. The Japanese were demonstrating that new models could be made with few defects, which made Volkswagen's situation all the more difficult.

Could Volkswagen workers have produced a better car from the beginning? The answer is, probably not. Recent experience has shown that American workers can manufacture quality vehicles equal to those produced in Japan, but to do this requires managerial strategies not practiced by Volkswagen in Europe or America--strategies that M.I.T. researchers have come to call "the lean production system" (Krafcik 1988). Various studies have shown that these techniques do work in America, even at Big Three auto plants, where traditional ways of manufacturing are well entrenched.

Another factor often linked to the decline of the Rabbit is the decision by McLernon to "Americanize" the car, that is, to tailor it to the tastes of the American consumers. This decision was in accord with Toni Schmuecker's global strategy of regional production units producing somewhat diverse cars. As a result, different headlights, interior trim, and seats, along with a softer suspension, made the Rabbit different from its German counterpart. When sales of the Rabbit plummeted, critics in Wolfsburg maintained that these changes had destroyed the car's German mystique. "We were not delivering what people understood by the name of Volkswagen," declared Carl Hahn, Volkswagen's new CEO (Ball 1983). (Toni Schmuecker had resigned in 1981 because of health problems.) In retrospect, however, the Americanizing of the car was not a major detriment to sales. In fact, the tailoring of VWs to suit the tastes of American consumers was a strategy that should have been vigorously pursued.