VW Loses Its U.S. Chief Again; Second Time in Nine Months

TIMES STAFF WRITER

It's beginning to look like a game of musical chairs at Volkswagen of America--and the president and chief executive is the one left without a seat.

The troubled company announced Wednesday that John Kerr is resigning effective Dec. 31. He will depart less than nine months after replacing William J. Young, who was forced out after two years at the unit's helm.

The turmoil at the top comes as VW's U.S. sales are down sharply and the company is undergoing a painful restructuring to regain profitability in Europe.

VW did not offer a reason for the resignation but in a statement said the departure was "mutually agreed" to by Kerr and officials in Wolfsburg, Germany.

"It came out of the blue," said Volkswagen of America spokesman Joseph Bennett.

Analysts speculated that the departure reflects disappointment in poor sales and perhaps a clash between top U.S. and German officials about how to get back on track.

"It can't be good for VW to change management so quickly, given the problems they've been having here," said Carnie Colliver, an analyst for AutoPacific Group in Santa Ana.

Clive B. Warrilow, president of Volkswagen Canada, will replace Kerr while continuing in his post in Canada. Company officials said it was unclear if operations in the two countries would be merged.

VW, once the leading U.S. importer, has fallen on hard times since the heyday of the Beetle.

Quality problems hurt its image, as did a failed manufacturing operation in Pennsylvania. Better products from the Japanese appealed to many VW customers.

Still, just two years ago VW ranked as the top European import in the United States. But the company's U.S. sales have plunged 37% in the first 11 months of this year to 44,430 from 70,791. The drop stemmed in part from a delay in shipping new Golfs and Jettas--the result of quality problems at the factory in Mexico.

Sales improved 6% in October and 15% in November, the first full months the new models have been in showrooms. But analysts say VW's sales of the Golf and Jetta have not gone as well as hoped.

Today, Volvo, BMW and Mercedes-Benz outsell VW here. And both BMW and Mercedes-Benz are building U.S. assembly plants to build vehicles for this market.

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