Volkswagen replaces U.S. chief executive as sales sag in up market

Volkswagen Group of America is replacing Jonathan Browning, its top executive in North America, as it struggles with stagnant U.S. sales while the rest of the car market is growing.

The German automaker said Browning was leaving “for personal reasons” and returning to his native England. He will be replaced by Michael Horn, head of Volkswagen Global After Sales.

Browning was facing pressure to grow VW sales rapidly after the company spent about $1 billion to open a factory to build Passat sedans in Chattanooga, Tenn., two years ago.

VW Chief Executive Martin Winterkorn and has set an ambitious target to sell 1 million VWs and Audis in the U.S. by 2018, almost double the automaker’s current sales.

“He is the victim of the fact the VW portfolio isn’t particularly well suited to the American market yet,” said Jack Nerad, an analyst with auto price information company Kelley Blue Book. “They have made some inroads, but there is still a lot to be done.”

Through the first 11 months of this year, Volkswagen’s U.S. sales, including its Audi luxury division, have fallen about 1% to 521,150 vehicles compared with the same period a year earlier, according to Autodata Corp.

The VW brand, which was Browning’s main responsibility, accounted for the decline. Its sales have dipped 5% to about 374,000 vehicles.

VW’s drop occurred even as U.S. auto sales have grown more than 8% so far this year.

The VW brand was recently passed by Subaru, one of the smaller Japanese automakers, in U.S. sales.

In a roundtable interview at the Los Angeles Auto Show last month, Browning was asked about Subaru’s throwing a recent party — featuring German food — after passing VW in U.S. sales.

Browning seemed unconcerned.

“We are building the brand for the long term in the U.S. We’ve seen the size of our business double there since 2009, so we don’t focus on one competitor or another,” he said. “Subaru can entertain themselves however they wish.”

For much of the year Browning had shrugged off VW’s lagging sales, noting that the automaker was selling far more Jettas and Passats than it had in many years, and that it had more cars in its pipeline.

Indeed VW’s sales so far this year are running 28% ahead of its sales in the first 11 months of 2011.

“We have established a new plateau and for the first time in 40 years we will have back-to-back sales of over 400,000 vehicles,” Browning said.

He also expected more gains, noting that VW’s Tiguan crossover could greatly improve sales on its next redesign and that the automaker was working on a seven-seat, mid-size sport utility vehicle that would sell well in the U.S. market.

“There are a lot of areas of the market where they don’t have an offering or what they have is uncompetitive,” Nerad said.

Given VW’s current sales level, “I am hard pressed to see how they can reach 1-million target,” Nerad said. “That is expecting an awful lot of Volkswagen in what is a hotly competitive market.”

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