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How Volkswagen Is Replacing Itself In The United States

Tmd Volkswagen Cupra Scout
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It’s been a full ten days since I’ve led off a Morning Dump with Volkswagen. I checked. While some of my articles have trended toward the negative, I am genuinely excited about the new brands that Volkswagen is planning to bring to America. If I were a dealer I’d probably be a little less enthusiastic.

The big news this morning is that Volkswagen’s Cupra brand is in talks with Penske to help launch the brand in the US by 2030. That’s now two different brands launched by VW here and both, it seems, without traditional dealers. Volkswagen isn’t alone. Hyundai and Amazon have been experimenting with doing something, but so far there hasn’t been much there there. It seems like there was a good reason for the delay.

Vidframe Min Top
Vidframe Min Bottom

Lately, I’ve been writing about how the impending Trump presidency brings with it a lot of confusion. The USA’s major OEMs are in a weird position as there are a lot of changes they’d support, though revoking the IRA tax credit doesn’t seem to be one of them.

And, finally, Northvolt just filed for bankruptcy.

Here Comes Cupra

Tom Cupra Mazda 1

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I called Cupra “Europe’s coolest car brand” when it was announced in March that the Volkswagen brand would be coming here at some point in the future:

The cars look great. Walking around England I kept seeking out Cupras and saw a couple of Formentors and, I think, a León driving the opposite direction. As with Škoda, Porsche, Audi and other VW brands, these are all just different flavors of modular VW platforms, but that doesn’t mean they aren’t all great. A spicy crawfish etouffee and a simple bechamel both start out as a roux, if you catch my drift.

As mentioned in the article, Cupra is a spinoff of Volkswagen’s Spanish brand SEAT, which was once a Fiat-affiliated automaker. A few years ago, SEAT thought it would be cool to focus Cupra as its own unique entity with performance-focused ICE, hybrid, and electric vehicles. That was one of Volkswagen’s biggest wins of the last decade, and the brand has such great momentum that VW said it would bring the company here.

I’m not alone in my appreciation of them around here, either. It’s not just a weird Matt Hardigree thing!

Today, Volkswagen announced that Cupra and Penske Automotive, one of America’s biggest dealer groups, would be a potential partner for the brand’s launch. This makes a lot of sense, as Penske Automotive’s store mix skews heavily towards Volkswagen Group products.

So what’s the company saying?

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“CUPRA’s ambition is to be a truly global brand and expanding into the United States represents one of the greatest milestones on our journey,” said Wayne Griffiths, CEO of CUPRA. “We have great respect for the U.S. market, recognising that a strong distribution and retail strategy is essential for success. By entering into preliminary discussions with Penske Automotive Group, we are exploring opportunities with the best possible partner, one with the right distribution network to introduce CUPRA to a new generation of American car lovers. Penske Automotive Group’s leadership in the industry and experience with the Volkswagen Group make this a very promising potential partnership” continued Wayne Griffiths.

CUPRA will enter the U.S. market by the end of the decade in key states that are aligned with the brand. Its range of products are expected to include ICE, PHEV and BEV. CUPRA will leverage synergies within the Brand Group Core by producing one of the models in Volkswagen factories in the North America region. To lead CUPRA into the U.S., Bernhard Bauer, the former Managing Director of CUPRA Germany, has been appointed as the new Managing Director of CUPRA USA​. The final location for its headquarters and details of the specific model lineup will be announced at a later date.

Hmmm…. Hmmmmm.

The “synergies” bit almost certainly means the Cupra Tavascan, which is a meaner/faster ID.4 that could easily be made in Chattanooga, right? That makes a lot of sense to me, although 2030 is a long way away so it could be something else.

What’s interesting here is that Cupra will sell ICE, PHEVs, and BEVs here. Volkswagen also has a brand that could do that, which is conveniently called Volkswagen. There’s a version of this that feels like Volkswagen is just replacing the weak VW brand, tossing away about 80 years of mostly good vibes. What’s the point of having both VW and Cupra, even if Cupra is slightly sportier?

Then there’s Scout. Volkswagen’s coolest new product is not going to be a Volkswagen, it’s going to be under another brand that will be sold without dealers. Dealers, predictably, are furious with VW over this and threatening to tie all this up in court. The Cupra tie-up with Penske doesn’t sound like a traditional dealer model but some sort of hybrid (I imagine seeing Cupra products in Penske stores and serviced at Penske dealers but actually sold through an app? Perhaps each store gets one Cupra specialist? Just spitballing here).

All automakers look at Tesla’s margins and dream about being able to cut out their dealers.

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Hyundai-Amazon Deal Ramping Up In January

Hundaiamazon
Hyundai and Amazon

Amazon and Hyundai announced they’d do something at last year’s LA Auto Show and everyone assumed that meant selling cars via Amazon. That’s not quite what’s happened yet, and the Amazon-Hyundai deal has mostly not had a big impact on the market.

There’s maybe a good reason for that. There was a plan for a bigger launch this summer but the CDK Global ransomware attack ended up stalling the whole thing. Now a year after the initial announcement, Hyundai’s Jose Muñoz explained to Automotive News that it’ll maybe happen in January of 2025.

What’s interesting, is that in limited trials Hyundai discovered that some people still want to go to a dealership:

As for dealer concerns about the customer’s journey once they complete the sale, Muñoz asserts the new platform keeps the sale with the dealer.

“The contract is between you as a customer and a dealer, not with Amazon,” he said.

Muñoz also said despite consumers expressing interest in wanting to buy cars online, almost all of them want to visit the dealership to take delivery of the vehicle, underlining the importance of physical dealerships.

“They want to go to the dealer to get the car themselves,” he said. “That’s also a discovery and one of the reasons why a lot of dealers have seen this not as a competition, but as something that reinforces their sales.”

Another path to get into a dealership is likely good for dealers, and it’s not like Amazon has ever undercut its own partners before.

Automakers To Trump: We Like Some Changes

2024 Chevrolet Blazer Ev Rs
Photo: Chevrolet

Politics is the art of compromise and, if done right, there’s usually some give and take. If you’re a major OEM that’s a part of the Alliance for Automotive Innovation then you’re probably cool with slowing down the EPA’s new tailpipe rules, though likely less onboard with removing the $7,500 tax credit.

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Reuters reports that the Alliance, which includes GM and Toyota, sent a letter to soon-to-be President Trump stating they’d love it if the administration did a few things in addition to keeping the credit:

The letter, signed by the group’s CEO John Bozzella, said automakers face unfair competition “from heavily subsidized electric vehicles and technologies exported from China” and also noted that China was implementing a regulatory framework to support deployment of self-driving vehicles.

The group also asked Trump to reconsider rules finalized in April requiring nearly all new cars and trucks by 2029 to have advanced automatic emergency braking systems. The group earlier said the rules are “practically impossible with available technologies.”

What’s interesting is that Trump’s new Chief of Staff, Susie Wiles, was formerly a lobbyist for General Motors.

Northvolt Files For Bankruptcy

Volvo Cars And Northvolt Accelerate Shift To Electrification With New, 3,000 Job Battery Plant In Gothenburg, Sweden
Source: Volvo/Northvolt

Well, that was fast. On Monday we pointed out that Northvolt was in trouble and now the Swedish battery company has filed for bankruptcy, admitting it’s got $5.8 billion in debt to deal with.

Per Bloomberg:

The Swedish electric vehicle supplier will seek to restructure under Chapter 11 of the bankruptcy code, it said in a statement on Thursday. Northvolt had about $30 million in available cash, it said in a filing, and $5.84 billion in debt.

That figure makes it one of the most indebted companies to file for bankruptcy in the US this year, according to data compiled by Bloomberg. It’s followed closely by Intrum AB, another Swedish company that logged a similar petition last week.

Northvolt was supposed to be Europe’s way of fending off battery companies in South Korea and China.

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What I’m Listening To While Writing TMD

My daughter is disinclined towards getting ready in the morning, so my wife thought it would be best to toss on some get-moving music. What better than Fatboy Slim’s “Acid 8000,” right? If this song don’t make your booty move, your booty must be dead.

The Big Question

If Volkswagen Group sells Scout, Audi, Porsche, Bentley, Bugatti, Scout, Lamborghini, Ducati, and Cupra in the United States does it really need Volkswagen?

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Dan Bee
Dan Bee
10 days ago

Let me get this straight: VW Group’s problem in the U.S. is that they need another brand?

Don’t get me wrong, a German buddy of mine has an awesome Skoda wagon, but that worked well there, not here in the States.

Ron Gartner
Ron Gartner
11 days ago

Cupra making the jump here with Penske just seems like a way for Penske to fluff it’s value with another partnership. How long until Cupra is the official car of IMS?

Just seems a bit odd to me that you’ve got the VW, a brand with a long history here in the states, and you let it flounder. The ID.4 is a flop, the Buzz will be a flop, and you’ve only got the middling Jetta, GTI, and the SUV lineup that’s mid-tier compared to the competition. Instead of trying to lose more sales to sister cars, maybe just focus on VW?

I think in a perfect world, VW dealers could have gotten Scout’s and we’d see co-branded VW-Scout dealerships that can show you the beefy off-roader, only to move you into a Tiguan when you realize that it’s a cheaper and more economical option (see Jeep dealers for this exact move). Now when Cupra comes along, if only Penske dealers are selling them, then you can protect the core VW brand and models sales while supplementing them with Scout sales and service.

Only time will tell, but maybe VW just wants to be a figurehead at this point. A stark contrast from the marketing blitz and societal imbedding they tried to push over 10-15 years ago.

Dinklesmith
Dinklesmith
13 days ago

I find it interesting that VW and Stellantis have basically become GM, in terms of having a bunch of brands with no clear identity that sell a bunch of cars that don’t differentiate well from each other.

Meanwhile, the real GM has pared itself back so much that we miss some of those cars like Pontiac and Saturn and wish it had more options

Drg84
Drg84
12 days ago
Reply to  Dinklesmith

Pontiac yes, Saturn not so much. GM tried to save the younger brands at the expense of the older ones with history. I’m honestly shocked Buick stayed in production in North America.

Tinibone
Tinibone
13 days ago

Hey, that’s my Cupra Born in the article there, cool!!

As for Cupra, I find it interesting that this model is the exact model they used to role out in Australia, partner with one of the biggest local dealership groups (for the initial rollout at least). It seems to be working ok here, although notably Cupra had a sales slide in 2024 vs 2023 in Aus so who knows if that’s got anything to do with it!

And as for market share, I do think Cupra has a different role than VW, it tends to maybe more replace the GTIs/Rs in the VW range than the full VW range. So you might lose you Tiguan R, but gain the Formentor VZ5 or something like that. With my experience that’s not a bad trade off, Cupra tends to do the sporty daily kinda well, but 5 years is an age in the automotive world so we’ll see how that plays out come 2030 I suppose.

Damon Young
Damon Young
13 days ago

Ok, so I just traded in my perfectly reliable yet utterly boring 2009 Corolla with 130K miles for a 2010 Eos with 38K miles. Yes, I knew it will be less reliable. The CEL came on a couple of months after I took delivery. Spent $2K on upgrades and lo and behold fixed the CEL too. It has a 6 speed manual, is Audi level fancy, and is WAY more fun than it has any right to be. I love it, and I do not see a single product that I am excited about at VW now. Oh! We were supposed to be talking about Cupra! My Swiss friend loves his Cupra. So I say bring them on!

Cameron Showers
Cameron Showers
13 days ago

I truly cannot wait for the Spanish inquisition that is cupra’s arrival 🙂 they do have some rad cars even if it’s under vw’s umbrella. Nothing wrong with adding more to the palette for American consumers

Dodsworth
Dodsworth
13 days ago

It’s not that I want to go to a dealership, I just won’t buy a car without driving it first.

Chris with bad opinions
Chris with bad opinions
14 days ago

LOL, they actually think the orange asshole can read?

Last edited 14 days ago by Chris with bad opinions
EvilFacelessTurtle
EvilFacelessTurtle
12 days ago

He can read anything as long as it’s written on an underage girl.

Drg84
Drg84
12 days ago

Mitch McConnell is that you? /S

Nick Fortes
Nick Fortes
14 days ago

If I never stepped foot in a dealership showroom or I should say dealt with a dealership salesman ever again, I’d be fine with it.

JDE
JDE
14 days ago
Reply to  Nick Fortes

However, those that do purchase in person and brand new do prefer to have a specific place to take the vehicle when a warranty event occurs.

Captain Muppet
Captain Muppet
14 days ago

European here: Cupra is boring. It’s like DS, or any other sub-brand spin-off of a badge-engineered replacement for what used to be an independent manufacturer.

My neighbour just got a free one as a company car, he’s as whelmed by it as he was the Ford Puma he had before it.

If you’re going to get excited about a VW brand get excited by the best Golf based car (I guess with an Audi badge?) or the cheapest (so a SEAT or a Skoda?, I don’t know or care enough to even Google, couldn’t they make all of them cheaper by just selling them as VWs and sacking like five entire Brand and PR teams?).

Cupra is a step up from SEAT, which is a step down from VW, so it really is just pointless marketing bollocks.

JDE
JDE
14 days ago
Reply to  Captain Muppet

the big question is does Audi need to exist if VW and Porsche does? would the Ford method of tarting up the basic stuff with previously Mercury levels of extras work?

Captain Muppet
Captain Muppet
13 days ago
Reply to  JDE

My brother-in-law is going through the process of replacing his VW with a Porsche version of a VW platform. He’s skipping the Audi step.

If Porsche did a version of the Golf and Passat then Audi could just quietly die.

Like Citroen should have when they stopped making uniquely weird stuff and started making re-styled Peugeots.

John Patson
John Patson
13 days ago
Reply to  Captain Muppet

Yip, they make huge (by Europe standards) SUVs, with a plunging roof at the back making the back only suitable for dwarves and children, and say it has “sporting dynamism…”
My 20 year old C5 Citroën has more dynamism. At least the more expensive hybrid DS7s have four wheel drive, even if it is from electric motors.

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