The Touareg Ultimatum

When Volkswagen launched its first sport-utility vehicle four years ago, it may as well have paraphrased President Kennedy's famous inaugural line: "Ask not what your company can do for Touareg, ask what Touareg can do for your company."

Volkswagen Touareg
The Volkswagen Touareg gets revised for 2008.

Touareg gets its first notable update for 2008, and Volkswagen is again appealing to the premium-priced SUV to give back more than it takes. In this, VW is asking the same of Touareg as do many of its owners.

It's an important juncture for a vehicle, and for a manufacturer, lauded for great design and rewarding driving, but suspect for dependability and dealer service.

What Touareg can do for its company is to give buyers a good feeling about VW. People who can afford to spend an average of $40,500 on a car have lots of choice in vehicles. They're not likely to choose another Volkswagen if their Touareg experience is a sour one.

Touareg was introduced during 2003 as a 2004 model. VW said at the time it knew quality would be vital. But early models in particular suffered reliability woes so severe VW bought some back from disgruntled owners and came up with a crisis-management Touareg service program. Placating Touareg owners is of special interest to Volkswagen.

As its most-expensive model, with an average transaction price of $40,500 (and a sticker than can top out over $76,000), Volkswagen relies on Touareg to attract buyers far more affluent than the average VW customer. This is what the SUV is doing for its company.

Touareg buyers make more money and have more education than buyers of other VW products. And compared to buyers of other premium-class SUVs, Touareg owners are younger, richer, and are more likely to be male.

Touareg Buyer Profile
Volkswagen says Touareg buyers have the highest demographics among VW owners, followed by buyers of the Passat sedan and wagon.

Passat sedan
 Passat wagon
TouaregPremium-Midsize SUV class
Male
50%52%
62%54%
Median Age
4553
4648
College Graduates
61%73%75%67%
Median Household Income
$77,082$107,228$119,000$114,000
Figures are for 2004-2007-model Touareg. Source: Volkswagen of America

These are indispensable demographics to a brand that counts a youthful, educated, upwardly mobile buyer profile among its most enviable assets. "Most of the other [auto] manufacturers would kill to have our demographics," said Emily Wilson, manager of new vehicle launches for Volkswagen of America.

Moreover, VW says Touareg is its strongest "conquest" vehicle, with 70 percent of buyers defecting from a competitor's SUV, primarily Jeep Grand Cherokee and Ford Explorer.

VW acknowledges that it's difficult to gauge how well Touareg has delivered on other hoped-for collateral benefits.

Showroom traffic did spike shortly after the SUV's launch, VW spokesman Clark Campbell said. Those were shoppers new to the brand, he said, if for no other reason than SUV intenders previously had no reason to visit a VW showroom.

VW Touareg
According to Volkswagen, Touareg is its strongest "conquest" vehicle,
taking sales from its competitors.

But how many shoppers came into showrooms to see the Touareg and ended up buying another VW model is unclear. "How many people came in looking for an SUV and left with another type of (VW) product is not something dealers record," Campbell said.

VW says 30 percent of those who did buy a Touareg were moving up from a less-expensive Volkswagen car. But how many of them were pleased enough with their Touareg experience to buy another VW is difficult to measure, Campbell said. "This is not something that we can substantiate in terms of data."

What VW's Doing for Touareg

Touareg sales started well enough, helped, Wilson said, by Motor Trend magazine's 2004 SUV of the Year award. "That drew a lot of attention, so we just didn't launch with a whimper."

But after a model-year high of 27,206 in 2004, U.S. sales declined steadily, falling to 11,500 in 2006 and, hampered by the model-year changeover, to just 4,030 in the first six months of 2007.

In all, VW sold 79,091 Touaregs in the U.S though June 2007. That pales compared to sales over the same period for SUVs VW identifies as Touareg's primary competitors: 474,741 for the Lexus RX, 264,723 for the Acura MDX, and 167,377 for the Volvo XC90.