VW Straddles Old and New in Electric Beach Buggy, Passat Face-off

(Bloomberg) -- Volkswagen AG's delicate balancing act between the old and new automotive eras will be on full display this week at the Geneva car show, where a fun-loving electric beach buggy will share the limelight with the trusty Passat sedan.

VW's I.D. Buggy concept combines battery power with styling reminiscent of carefree days tearing around California sand dunes, tapping a retro flair similar to the I.D. Buzz minibus. Behind the revival of the Beetle-based Meyers Manx buggy lies a deeper message: VW can, and probably will, build almost any type of model off its new electric vehicle platform, dubbed MEB.

The world's largest carmaker plans to roll out 50 battery-only models by 2025, and winning over consumers to these vehicles is critical for VW to make its 44 billion-euro ($50 billion) investment in electric vehicles pay off. To help spread the costs of its aggressive transition away from combustion vehicles, VW is in talks about sharing the underpinnings with other manufacturers like Ford Motor Co.

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While the I.D. range heralds the future, the updated Passat sedan and wagon tell the tale of its past. On sale since the 1970s -- with lifetime deliveries nudging 30 million vehicles -- one of VW's best-selling models has come under pressure as consumer tastes shift to sport utility vehicles.

Fading Classic

While the eighth iteration could turn out to be its last hurrah, VW can ill-afford to have the Passat falter too quickly. With 2017 sales of more than 660,000 vehicles, including its Chinese sibling Magotan, the mid-level sedan is needed to help fund electric-car development.

“The Passat has been a classic in Europe for years, but the segment as a whole has come under quite some pressure,” said Stefan Bratzel from the Center of Automotive Management near Cologne, Germany. “Demand for mid-sized sedans and station wagons won't fall to zero, but costs are going to play a very central role going forward.”

To prop up Passat sales, VW is adding a limited R-Line sports edition as well as techy gadgets like partially automated driving at any speed and a smart steering wheel that detects when the driver touches it. The car will also be available as a plug-in hybrid version.

VW is also pondering a shift of production from Germany to a low-cost factory in eastern Europe around 2022 to bolster profitability and make room for electric vehicles that'll be made at its domestic sites.

Niche Ambitions

The first car based on VW's MEB platform, the I.D. Neo hatchback, will roll off assembly lines at the end of this year. The technology will “facilitate the development of low-volume niche series” like the Buggy, VW said in a statement, without committing to a production version. Just some 250,000 of the squat vehicles were built worldwide during their peak era in the 1980s.

The German manufacturer isn't alone in injecting past pizzazz into its future lineup as automakers seek to draw in consumers skeptical of the high costs and limited range of electric vehicles. French brand Peugeot caused a stir with the E-Legend, resembling its classic 504 coupe from 1969, while Concern Kalashnikov JSC, maker of the AK-47 assault rifle, came up with a battery-powered incarnation of the Soviet Union bestseller Izh-Kombi.

VW's nostalgic moments have had their limits. It axed the Beetle revival last year in a push to trim a bloated product range spanning more than 300 vehicles across the 12 brand group. It's betting the styling revival works better for next-generation technology.

The beach cruiser “demonstrates how a modern, non-retro interpretation of a classic can look and, more than anything else, the emotional bond that electric mobility can create,” VW design head Klaus Bischoff said.

To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Elisabeth Behrmann, Chris Reiter

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