2010 Volkswagen Rabbit
Recently released photos of the sixth-generation German-market Volkswagen Golf (above) show the redesign preserves the current model's general dimensions and appearance. See pictures of the 2009 Rabbit.

Consumer Guide's Impressions of the 2010 Volkswagen Rabbit

Europe's number-one automaker makes a new assault on the U.S. market, led by a redesigned and more affordable Rabbit. The aim: Topple Toyota as the world's biggest car company.

What We Know About the 2010 Volkswagen Rabbit

Things are changing at Volkswagen. Newly determined to topple Toyota as the world's number-one vehicle producer, Europe's top-selling brand has embarked on a 10-year offensive, dubbed "Strategy 2018," that aims to more than double VW sales both globally and in the lucrative North American market--to about 10 million and 800,000 units per year, respectively. Those are ambitious targets. For calendar 2007, U.S. VW-brand sales totaled 230,572, down two percent from '06. Global 2007 sales for the entire VW Group, which includes Audi, Bentley, and several nameplates not sold in the U.S., were about 5.7 million, versus some 9.4 million for number-one Toyota. Among the key elements of "Strategy 2018" are a new U.S. assembly plant and products better tailored for American tastes and market conditions, headlined by a redesigned 2010 Volkswagen Rabbit.

Though its premium Audi brand has been going great guns here, VW itself has lately struggled for sales with Eurocentric vehicles that aren't price-competitive because of a steadily weakening dollar (down 40 percent against the euro since 2001). Indeed, VW's North American operations lost nearly $844 million in 2006 alone.

To get around this problem, VW is setting up a new U.S. assembly plant in Chattanooga, Tennessee. Reports say this plant could be online in early 2011 and will have a capacity of up to 150,000 vehicles per year. The first product is said to be a new midsize sedan that the company is developing specifically for the United States. Eventually, VW also plans to build engines and transmissions here, and to source as many components as possible from domestic suppliers. When the new plant will start to turn out VW's most popular existing North American models, namely the Jetta and Passat sedans, and the just-introduced Tiguan compact SUV is unclear. We've also heard rumors of a new midsize SUV or crossover, but again there are no solid details. The New Beetle would probably continue to be built exclusively at VW's Puebla, Mexico facility, an important currency hedge itself. The 2010 Volkswagen Rabbit and niche models like VW's Eos convertible would presumably still be imported from Western Europe, though sourcing from lower-wage countries, including China, is a distinct possibility.

Beyond shifting production venues, VW hopes to be more price-competitive by redesigning its vehicles to be simpler and less costly to build. Because of strong pressure from labor unions, especially in Germany, VW has some of the highest manufacturing costs in Europe, and that's reflected in sticker prices. And because its products tend to be tailored primarily for Europe, they end up somewhat over-engineered for American tastes, which only adds to VW's price disadvantage here. So do premium standard features that Europeans happily pay for but which put off American buyers who still equate small with cheap.

The 2010 Volkswagen Rabbit will be a key test of the company's overall efforts to lower costs and improve productivity. Keep in mind that the bunny badge returned for 2007 for the U.S. version of the fifth-generation Golf hatchback. (The Rabbit name was revived from 1975-84 to replace Golf as a sales-boosting tactic.) Sources say the replacement "Mark VI" Rabbit/Golf will be simplified in both design and content to achieve lower base prices, though VW says its c­ompact will still cost 5-10 percent more than a comparable Honda Civic or Toyota Corolla. That's partly because VW sees itself as more of a premium brand than Asian competitors, and thinks pricing should reflect that.

Updated by Don Sikora II 08.07.2008

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