July 18, 2017

VW Mines Nostalgia Again With Planned Relaunch of its Bus as an Electric Vehicle

The Volkswagen "Bus" which was known officially known as the VW Type 2, while the original Beetle was known officially as the VW Type 1; and Volkswagen, to its credit, actually embraced the different nicknames for its designs in different markets, even using those nicknames in its advertising was officially launched in 1950.  It, along with models like the low-priced sports-car design known as the Karmann Ghia (which were sold from 1955–1974) were all immensely popular across the U.S. market.  The VW Bus, in particular, arguably peaked in popularity back in the late 1960's; the VW Bus was particularly popular during the counterculture movement of the 1960's and was iconic with many hippies, some of whom actually tried to live in their VW Bus, as well as had sex in, smoked marijuana and took LSD in these vehicles.  The VW Bus had become iconic with the hippie movement, although it continued selling in the U.S. until 1979.

The retro blog ClickAmericana has an entire page dedicated to some of the ads for the VW Bus/VW Type 2 sold in its later years (the 1970's) at http://clickamericana.com/eras/1970s/volkswagen-bus-ads-1977 which are worth looking at (I've featured one such ad here, and if you click on it, you will then be redirected to ClickAmericana's relevant webpage.

Notwithstanding the VW Bus association with now-elderly hippies, the VW Bus was also part of VW's early success in the North American market.  But following the ending of the Vietnam war, combined with the VW's discontinuation of the Type 1 model with the introduction of newer A1 model meant to replace the Beetle, which featured front-wheel drive and a water-cooled engine, branded as the VW Golf (initially sold under the VW Rabbit nameplate in the U.S.), although the Vanagon was the name given to its newer "bus" model in the U.S.) remained on the market for a few more years, but the era of the VW Bus, at least in the U.S., seemed to be over.

In the decades that followed, Volkswagen as a company had largely fallen off the radar of American car buyers.  The Golf, in spite of being one of the world's best-selling cars, was never a huge seller in the U.S., sales of the Jetta weren't great either, and sales of the Passat were also quite limited.  The Passat was simply too pricey for mass market American consumers, many of whom preferred Hondas/Acuras or Toyotas/Lexus cars.  Plus, many younger generations of Americans had absolutely no relationship with Volkswagen at all.  In fact, younger generations hardly even knew who Volkswagen was as a company.  Making matters even worse for Volkswagen were currency exchange rates (when the Deutsche Mark was still the currency of record for Germany).

Many writers have observed that the Germans at Volkswagen remain eternally frustrated with what they consider to be a peculiarity of the U.S. market, like the importance that U.S. buyers place on seemingly trivial items such as high-fidelity stereo systems and cup holders.  People in Germany believe that a car is for driving, not for concerts or picnics.  But Americans disagree wholeheartedly.  The conditions of American roads are abysmal, and there is no autobahn in the U.S., hence performance isn't always the most important factor considered in buying decisions.  Traffic in the U.S. is horrendous by German standards, and never improves -- and not just in Los Angeles or Houston.  These things make apparent niceties like sound systems important to making a daily commute from hell tolerable, something Germany has little experience with, with well-maintained roads and efficient public transportation.  Volkswagen, in spite of its success in Europe, has arguably struggled in North America, while smaller Swedish rival Volvo even managed to outsell VW in the U.S. at one point, which says a lot about Volkswagen's U.S. struggles.

The VW Beetle spent a few decades on hiatus (at least in the U.S.), before being resurrected in 1998 to positive reviews and sales.  The VW Concept 1, known as the "new Beetle" changed all that.  It was essentially a VW Golf under the hood, but the design was much truer to the original Beetle that many Americans had a fondness of.  Its design originated in California, but the quirky design evoked fond memories from Americans who drove the original VW Type 1 "Beetle", and became Volkswagen's most successful U.S. auto introduction in decades.  Many also hope that a new Karmann Ghia might emerge as well, though a few models do not guarantee ongoing success for an automaker, especially one that aims to remain one of the world's biggest.  The VW Bus, in different iterations, has attempted comebacks, but never seemed to gain the success it had in the 1960's.

Indeed, mass-market European automakers like Volkswagen have struggled in the U.S., although European luxury car makers including Germany's BMW, Mercedes-Benz and Porsche, Britain's Jaguar, Italy's Alfa Romeo, Ferrari, Lamborghini and Maserati have all succeeded because of their premium prices.  However, other mass-market European brands, including Fiat, Renault, Rover and others have had lengthy periods of time where the companies completely exited the U.S. auto market.  Yet Sweden's two automakers Volvo (and to a somewhat lesser degree, Saab) succeeded while bigger rivals from France and Italy failed mainly because they successfully created and then targeted lucrative niche markets -- mainly for safety.  Indeed, Sweden's carmakers have remained in the U.S. since they were first introduced.  It should be noted that in Sweden, Norway, Denmark and Finland, most of Volvo cars on the streets are small cars, not the big cars sold by Volvo in North America today.  Indeed, Volvo became one of the most successful, albeit niche, automakers anywhere in the world, keeping many Swedes in auto-making jobs for much longer than conventional wisdom suggested was even possible, let alone likely.

It's worth noting that Sweden's Volvo was part of a larger Swedish company that made a variety of industrial products (including aircraft parts, etc.) and the types of big trucks found transporting goods.  Volvo's automobile unit known as Volvo Cars has been under the ownership of the Zhejiang Geely Holding [Geely Holding] of China since 2010, when it was purchased from Ford Motor Co., but for decades before, Volvo succeeded selling cars despite its small size largely because its most widely-sold (and most expensive) car models' extraordinary safety records, which proved to be a very lucrative, profitable and unique "niche" market that had been largely ignored by other automakers.

With U.S. startups like Tesla aiming to claim the luxury market for electric sports cars, in June 2017, Volvo announced that by 2019, it would only make fully electric or hybrid cars.  To date, Tesla is a luxury car maker, while mass market manufacturers have moved more slowly on electric vehicles.

The U.S. history of automakers outside of Detroit's "Big Three" (GM, Ford and Chrysler, the latter of which has been owned by both Germany's Daimler Benz, and more recently, Italy's Fiat) has seen a history of failure against the big Detroit automakers.  Japanese automakers have proven the exception, rather than the rule.

For example, from 1954-1988, the company formerly known as American Motors Corp. (also known as "AMC", which itself was a descendant of the Nash-Kelvinator Corp. following its merger with Hudson Motor Car Company.  That company's origins were in Wisconsin, not Michigan, although executive talent necessitated relocation to the Great Lakes state.  For a time in the late 1960's to the early 1980's, AMC competed aggressively with GM, Ford and Chrysler, mostly with its rather peculiar car designs, including the Rambler, the Gremlin, the Pacer, the Matador and finally the Eagle.  AMC's best known auto brand endures under Fiat Chrysler, which is Jeep.  When Chrysler acquired AMC in 1988, it marked the end of Detroit's four major automakers.  After that, there were a few startups which did not last, most notably the DeLorean Motor Company (whose auto model DMC-12 was featured memorably in the "Back to the Future" movie trilogy, as the model of car made into a time machine by eccentric scientist Doc Brown, although the company had ceased to exist even before the first movie was made).  Tesla's long-term success remains unproven, although its push into electric sports cars has helped push Volvo and eventually, Volkswagen to pursue wider marketing of electric automobiles in the U.S.

That said, as of 2017, infrastructure limits for electric vehicles in the U.S. remain, including electric car recharging stations that have yet to see widespread adoption across the U.S.  But Volvo is not Volkswagen, and apparently Volkswagen foresees an opportunity to join Volvo in the move towards electric cars.  After all, the Swedes' ongoing success in the U.S. while Germany's auto giant VW has struggled, suggests that the Chinese-owned Nordic automaker might be onto something.  Adding to that, Volvo's new Chinese parents want to advance the technology for electric autos, and realistically, that's probably more likely to come from the West than it is from the Chinese mainland, although relevant components are likely to come from China.

Around the same time as Volvo's announcement, at the 2017 Detroit Auto Show, Germany's Volkswagen unveiled an electric microbus concept called the ID Buzz which was clearly meant to be a more modern successor to the old VW Type 2 or Bus as it was more popularly known.  The company also unveiled the new microbus concept at last year's Consumer Electronics Show.  An image of the new microbus, along with another graphic can be seen below.

Irish Times reported: "VW is playing the nostalgia card for all its worth with this concept car. The styling is a very simple update of the original Type 2, right down to the deep "V" shape in the centre of the front, which is now being used to replicate the effect of a smiley face. It couldn’t be more hippy if it tried."

The Street subsequently announced that VW actually plans to re-introduce by the hippy favorite as an all-electric vehicle with a driving range on its battery power of 270 miles which another media outlet reported a planned introduction by 2020.  Previously, the ID Buzz was merely a concept car.  However, the company saw similar success in the U.S. market with the introduction a new Beetle following a similar manner of introduction.  Quirky design style is also key to the company's success.

But while young hippies in the late 1960's fell in love with their VW Buses, it's far less certain that today's American youth will adopt the new VW buses as their transportation method of choice.  As of 2017, the Baby Boomer population has been declining (and will continue to as normal lifespans end), although Gen Xers remember seeing them on the road when they were growing up, but selling to and capturing the Baby Boomer nostalgia market segment no longer ensures success for companies.  And Millennials seem largely indifferent to automobiles, and as a generation, has one of the lowest incidences of driver's licenses of any group observed in decades.  Necessity, of course, may yet push some to get cars eventually.

But a report (an update to an earlier survey from 2014), from researchers at the U.S. Public Interest Research Group and the Frontier Group, shows that Millennials are far less car-focused than older Americans and previous generations of young people, and their transportation behaviors continue to change in ways that reduce driving.

While urban dwelling is a major factor behind the decline in car interest among youth, it's also a fact that many Millennials are being priced out of the very cities that they once flocked to en-masse (or aimed to move to, see HERE for more information on that).  Increasingly, more and more hipsters are migrating to nearby suburbs with mass-transit access, typically near suburban commuter rail lines and express buses.  The question is whether that suburban migration will bring more auto-buying, or whether car-sharing services like Zipcar and competitors will effectively address that need?  It's also possible that technology-driven solutions may prove even more compelling than electric cars by themselves (but car sharing of electric vehicles may hold appeal).  Many companies, including Alphabet's Google and countless others are pursuing self-driving cars, and we can realistically expect to see the established automakers pursue this as well, even though much of the early development is coming from Silicon Valley.

Nevertheless, as The Street reported, Volkswagen will indeed pursue its first electric vehicle, which just so happens to be its resurrection of the VW Bus that was so popular among young hippies.

Maybe we'll yet see a new version of the Volkswagen Karmann Ghia in the future?  Let's hope so!

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