In the android phone market, we know that mid-tier phones do very poorly; People can afford a high end one, or they can't afford anything, so they have to get the cheapest one available. I kind of feel like automobiles are going the same way. Why pay for a mid market car from VW when you can spend another $5,000 and sit in a BMW or Mercedes? Or why spend $30,000 when you can spend $20,000 and get essentially the same…
The automobile market is not that simple. It's possible for a car to be moderately priced, sell in huge numbers, and make a profit. In the mid '90s Chrysler sold 100k+ minivans a year and made an average profit of $5k. I'm sure today someone is doing almost that well with cute SUVs. VW has the wrong product mix for North America: no trucks, no popular SUVs. They got burned with US regulation because they cheated. It'…
Yet, VW turned Audi around and made it into a luxury brand in the US.
The Planet Money podcast covers a little more into how they did it.
http://www.npr.org/sections/money/2012/06/15/155039824/can-l...