Volkswagen of America CEO talks growth

When Volkswagen of America relocated its headquarters to Herndon from Auburn Hills, Mich., in 2008, the company set out to revamp operations. It refocused attention on its small sport-utility vehicles and passenger cars to compete with popular Toyota and Honda models.

But the effort got under way just as the nation was heading into one of the worse recessions on record, dragging the auto industry into a slump. Volkswagen, like many of its peers, watched sales slide through 2009. Yet the German automaker held fast to its repositioning strategy, which has begun paying off.

In 2011, Volkswagen’s domestic sales operation recorded its first profitable year since 2003. The company closed out the year with 324,402 sales, a 26.3 percent increase over 2010. Volkswagen kicked off production of the 2012 Passat at its newly opened plant in Chattanooga, Tenn., last spring. Customers have driven 22,779 of those retooled sedans off the lot since it debuted in September, surpassing the brand’s sales for the prior year.

Capital Business caught up with Jonathan Browning, president and chief executive of Volkswagen of America, at the Washington Auto Show for a chat about the company’s domestic growth and outlook for the coming year.

How have your operations grown since your relocation to Herndon?

We arrived here with just over 300 employees; over time that has grown into 400 plus. We’re actually going through a re-stack of our office in terms of creating the space for additional employees. We’re [looking to add] 130 employees over the course of this year. That’s added $2 million of investment in terms of to those facilities, work that has largely been conducted by local businesses.

What types of positions are available?

It’s across the board; typical commercial functions — sales, marketing, human resources.

Would you ever consider opening a plant in Virginia?

When we did the site selection for the plant in Chattanooga, Virginia was one of the locations that was looked at. Unfortunately, there wasn’t a facility that was large enough and had the scale of infrastructure required. But as we’ve moved our corporate headquarters here, we definitely recognize Virginia as a good place to do business.

Although our manufacturing location went to Tennessee, corporate headquarters here is really thriving. We’re seeing the benefit of a positive local environment, great labor pool and high quality of living.

How would you characterize the state of the auto industry?

We’re in a phase of steady recovery. But you have to look at the industry in the context of the pre-recession highs. While 17 million units [in sales] was probably inflated in the pre-recession phase, we closed last year at 12.8 million. So the industry hasn’t recovered to pre-recession levels yet. We’re forecasting the industry will get back to between 13.5 and 14 million next year. It’s a progressive recovery.

You’ve got some uncertainty on the macroeconomic level, but you have consumer confidence beginning to recover, positive movement in the housing sector, low interest rates and positive residual value.

Danielle Douglas covers the banking industry for The Washington Post.
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