VW accents performance in its US pitch

Whipping around the slalom course in a snappy '83 Rabbit GTI, tires screeching in the turns as the car briskly responds to the accelerator-brake interplay by the driver, one finds it doesn't take long to detect the image that Volkswagen of America (VWOA) is trying to project.

In fact, the West German vehiclemaker, badly damaged by the devastating drop-off in car buyers the world around, is carefully honing an image of performance awheel.

VW has 3 percent of the car market in the United States, but its goal is 5.

Understating the fact, Peter Weiher, head of sales for the American operation , asserts: ''This has been a very difficult year for VWOA as well as for the entire automotive industry in the US.''

The point is, things could only improve.

Thus, peering down the road toward better days ahead - hopefully in 1983, Mr. Weiher says - VW is highlighting:

* Performance. The snappy gasoline-engine Rabbit GTI will carry the VW message to the car buyer.

* Economy. In December, VW will begin to phase in a diesel-engine Rabbit that breaks into the 50-mile-a-gallon range in the city driving cycle, but carries an Environmental Protection Agency rating of 67 m.p.g. on the open road.

With a new energy-saving power-train management system and semiautomatic 4 -speed transmission, it is the highest-mileage production car sold in the US.

But how about that SMVW (Super-Mileage Volkswagen) which, VW says, gets more than 3,500 miles to a gallon of fuel?

The slim, one-cylinder diesel car - car? - which a VW design and engineering team has developed not only requires a driver under 5 feet in height, but who weighs no more than 90 pounds. The SMVW can go up to 10 miles an hour when the conditions are just right.

Gimmick or not, it shows that VW has high fuel economy on its mind.

VW has also unveiled the '83 flagship Quantum and the Rabbit-derived Jetta with optional 1.6-liter turbocharged diesel engines. A Rabbit turbo diesel will soon debut.

* Price. VW may be taking a big chance by dropping the base-level VW of last year and starting with the Rabbit ''L'' at $6,290, yet the company says it is substituting a ''complete car'' for a ''price leader'' alone.

''It's always nice to have a price leader,'' says James Fuller, head of the Volkswagen division of VWOA, ''but our philosophy is to be more straightforward.

''You can always have a car that you can price at $4,800, but it's not a real car.'' The entry-level Rabbit accounted for less than 5 percent of all VW sales in the '82-model year.

* Service. The VW management is hammering its dealers to ''deliver'' on service, a clear customer expectation when a new car is sold.

* Pleasure to drive. The West German automaker says a car should be ''fun to drive,'' and it claims its '83 car lineup is just that.

In fact, VW's '83-model lineup follows the realignment of its organizational structure in West Germany as well as in the US.

For one thing, Volkswagenwerk AG got a new president early this year, as Dr. Carl H. Hahn, who headed up the VW operation in the US from 1959 to '64 but who left VW a few years later when he switched to the tire business, succeeded Toni Schmucker in the front office in Wolfsburg.

The American operation has a new president as well, a robust South African by the name of Noel Phillips. Beginning his third work stint with VW, including two assignments in the US - no one else has ever returned to VW three times, Dr. Hahn quips - Mr. Phillips succeeds James W. McLernon, a former General Motors manufacturing expert who built the VW assembly plant in western Pennsylvania, near Pittsburgh, and brought an old Army tank plant in Sterling Heights, Mich., to within a year of assembly operations if VW ever decides to go ahead with the project.

But what VW needs now is a marketing expert - and Mr. Phillips is generally credited with being one.

Taking a cue from its upscale Porsche-Audi division, the American operation has strengthened its internal organization by creating a Volkswagen division headed up by Mr. Fuller, who had the same job at Porsche-Audi.

With its management shuffle complete, VWOA has staked out its claim for higher sales when the car market turns around.

For Volkswagen's problems, VW critics blame not only the devastating drop-off in automotive sales worldwide, but the aging Rabbit, too - a car whose basic design came from Giorgetto Giugiaro, founder and head of one of Italy's preeminent auto-design studios, Ital Design. The Rabbit has been copied by other carmakers, to the point where many similar cars are hard to tell apart on the road.

The Rabbit, in fact, seems to be a victim of its own success.

Both Phillips and Fuller deny that the Rabbit is ''out of date,'' saying that car buyers want more than just new sheet metal in a car.

Be that as it may, a brand-new Rabbit is seen as two years off, even though Dr. Hahn denies the existence of such a car.

''Why should we change a shape which has been so successful and which has been copied by everybody?'' he asks.

Yet, critics reply that the Rabbit is not the beetle (now in its 46th year).

What may help the aging Rabbit is the brand-new, to the US at least, GTI performance car, a model that has been popular in other markets for the last five years but is just now being built and sold in the US. The West German car manufacturer launched a crash program a year ago, after heavy pressure by its US subsidiary, to refine the car for the US market.

Yet the number of Rabbit GTIs for the US market is restricted by the company's capacity to build the engines which come from West Germany.

How does VW see its prospects in the rest of the world as the '83-model year gets under way?

Looking at South America and Mexico, in which VW has major operations, Hahn says: ''We are not isolated from the economic problems of the rest of the continent. We realize that the recovery of Brazil will be a painful one and a relatively long one due to the indebtedness of the country. The automobile figures of 1978-79 will not come back for Brazil before the mid-1980s.''

In Mexico, VW increased its business volume in a poor market.

''We see, of course, that Mexico is entering a most difficult phase,'' Hahn says. A year ago, VW had 30 percent of the car market there, but is now at 43 percent.

VW builds cars, including the beetle, as well as engines in Mexico.

''We are now manufacturing 800 beetles a day in Latin America,'' Hahn says.

As for Europe, he says: ''Given the state of the economy in Europe as well as the overall situation in the world, we do not expect the European economy to show sizable improvements before 1984. This, of course, will reflect more and more on the automobile industry.''

Denying a rumor that VW may shut down its Rabbit assembly plant in the US, Hahn said: ''VW will continue to produce the Rabbit in the US and will not be diverted by the ups and downs of the market, but will look at the US market on a long-term basis.''

VW continues to lose money on its US-built Rabbits because of the strong dollar vis-a-vis the West German deutsche mark, as well as the amortization of the huge investment it has already made in the US, both in the Pennsylvania assembly plant and the unfinished plant near Detroit.

Ironically, the company might be better off if it continued to import the Rabbit to the US from West Germany. In the Rabbit line, it now imports only the convertible. Yet, with all the agitation over import car sales in the US, notably by the Japanese, VW has isolated itself from such attacks.

Only about 25 percent of VW Rabbit content is from outside the US.Would VW sell the unfinished Michigan plant if it could?

''First, you need a buyer,'' Dr. Hahn replies. Ultimately, the company expects to put the plant to work. The plant was to have been used for assembly of the Rabbit pickup truck.