VW reboots Americas strategy, drops diesel in U.S.

Tue Nov 22, 2016 4:05pm EST
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By Andreas Cremer

WOLFSBURG, Germany (Reuters) - Volkswagen (VOWG_p.DE: Quote) said on Tuesday it would drop diesel vehicles in the United States and refocus on sport utility and electric vehicles, as the automaker looks to reboot strategy for its core brand in the Americas in the wake of a damaging diesel emissions cheating scandal.

The move, announced by VW brand chief Herbert Diess, breaks with earlier suggestions it could return to the once-popular technology after the emissions scandal fades from memory.

The decision to drop diesel vehicles - which formerly made up a quarter of the brand's U.S. sales - is just one element of a strategic overhaul that Diess conceded could take a decade to close the gap with rivals in the United States.

Volkswagen has agreed to pay billions of dollars in fines and compensation payouts to U.S. customers since admitting last year to cheating on federal diesel emissions tests.

"For years we have been lacking a blueprint for success in the United States, while we are losing ground to rivals in markets like Brazil or India," said Diess, a former BMW executive who joined VW in July 2015. VW had missed "the SUV boom," he said.

The brand now plans to have 19 SUV models globally by 2020, up from just 2 now, and including some electric ones. It aims to sell 1 million electric vehicles a year by 2025.

"At the moment we assume that we will offer no new diesel vehicles in the U.S," Diess told European business daily Handelsblatt.

Volkswagen showcased its Atlas SUV, built expressly for the U.S. market, at the Los Angeles Auto Show last week.   Continued...

Volkswagen's brand chief Herbert Diess delivers his speech as Volkswagen presents a turnaround plan at a news conference in Wolfsburg, Germany November 22, 2016.  REUTERS/Fabian Bimmer