Volkswagen: A Mess Waiting To Be Cleaned Up

And its management knows it. That's why,reports BusinessWeek, it should be to no one's surprise that new CEO Stefan Jacoby paid a visit to VW's Auburn Hills, Michigan headquarters now even though he doesn't actually start the job until September 1.

The urgency is definitely apparent. The company lost almost $900 million in the U.S. last year which is about the same in 2005. And things have not been that much better in 2007: sure, VW sales are up 2.7 percent so far this year, but that is somewhat deceiving. Sales have been down by about 100,000 every year since 2003. Sales of the Jetta is down 6.3 percent; the Passat has dropped 30 percent; and the Beetle has plunged 20 percent. Things have gotten so desperate for the German auto maker that it has turned to incentive spending, something the company had discouraged throughout its history.

Well, of course, the pundits know how to fix things (as if the actual auto execs don't). They point out that the cost of making VWs are too high; wrong products are being offered (that's the pundits, not us); and the cars are being poorly packaged (again, the pundits).

VW is considering creating a plant in the U.S., thinking that this might provide some relief. However, pundits suggest VW use its plant in Mexico and get parts from the U.S. and Latin America.

As for the wrong products, some are saying that the new Jetta and the Passat are just styled too conservatively: it simply doesn't look uniquely German or uniquely VW. The new Beetle looks okay, but it is just old. The pundits also say that the Touareg, the luxury SUV, isn't the right fit for VW in the first place. And although the Rabbit seems to be doing okay, these pundits argue that a hatchback has a limited market in the U.S. 

However, some -- shock! -- are offering some good news. The upcoming Tiguan (pictured) crossover, which will be introduced by VW in 2008, may fit a vacuum in the VW line that can go after the Toyota RAV4 and the Honda CR-V.

More detail can be found above. Our take? So, there you have it. Pundits have had their say. Are they right? Well, they aren't in those tower offices worrying and imagining about the future. Maybe they are right. And maybe the execs will take the free advice and go on and save VW in the U.S. market. Then again, maybe the execs will fall back on their past successes and make new successes based on their own new ideas. Again, things need to play out. So to the pundits, is it thanks for the free advice bud, but no thanks. Or is it thanks for the free advice bud. What other ideas do you have?