VW promises dealers it will cut prices to boost U.S. sales after diesel debacle


2016 Volkswagen Passat SEL long-term test

2016 Volkswagen Passat SEL long-term test

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In addition to a cash settlement with its U.S. dealers, Volkswagen said this week it would take measures to increase its sales in the U.S. following a year of its still-unresolved diesel-emissions scandal.

VW dealers were initially left out of a $14.7 billion settlement for 450,000 owners of 2.0-liter 4-cylinder TDI cars found to have illegal "defeat device" software.

Dealers subsequently pushed Volkswagen management not only for a separate settlement of their own, but also a tactical reset to help boost flagging sales.

DON'T MISS: What do VW dealers get from the diesel-emission settlement?

VW announced last week that it was negotiating a settlement with dealers, and that it will also lower prices to make its products more attractive to consumers, reports Bloomberg.

The settlement, believed to be worth $1.2 billion, will include cash payments to dealers and other benefits, but the company won't discuss the matter further until details are finalized at the end of September.

Meanwhile, lowering prices addresses some dealer concerns that predate the diesel scandal.

2017 Volkswagen Passat

2017 Volkswagen Passat

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Over the past few years, Volkswagen has made a concerted effort to grow its North American sales, but the results have been mixed.

The German carmaker opened a new factory in Chattanooga, Tennessee, and tailored the Passat mid-size sedan to American tastes.

ALSO SEE: VW dealers' reparations talks with company: no deal so far

But VW continued to concentrate on sedans and hatchbacks, even as low gas prices have driven more and more car shoppers to SUVs and crossover utility vehicles.

Volkswagen currently offers just two SUV models—the Tiguan and Touareg—that are both old and priced higher than their competitors.

Today, that can be said of most of the models in VW's current lineup, in fact.

Prototype Volkswagen 7-Seat Crossover

Prototype Volkswagen 7-Seat Crossover

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As well as lowering prices, Volkswagen plans a handful of new models that may help rectify that issue—and that dealers appear quite eager to get their hands on.

The second-generation Tiguan that debuted at last year's Frankfurt Motor Show will go on sale in the U.S. next year, with a longer-wheelbased model to be built in Mexico.

It will be shortly followed by a new seven-seat crossover, yet to be named, that will be assembled in the Chattanooga plant along with the Passat.

MORE: The other VW diesel victims: dealers take woes to Wolfsburg

Before that, however, the 2017 Volkswagen Golf Alltrack wagon is also highly anticipated by dealers.

Boasting a raised ride height and SUV-like styling, the Alltrack is an all-wheel drive version of the Golf SportWagen.

It gives VW what is essentially a response to the popular Subaru XV Crosstrek and Forester crossovers.

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