David Welch & Christoph Rauwald:

Diess’s trial balloon underscores how VW is struggling to regain its footing in the wake of the diesel-emissions scandal, which sent sales plummeting. Returning to the days when it was a boutique brand in the U.S. — more like Subaru or Mazda — would be a turnabout by a company that aimed to more than triple sales in the country and overtake Toyota as the world’s largest and most profitable carmaker. It would also be an admission that the VW reputation is so damaged that it simply can’t go head-to-head with the biggest players in the world’s most lucrative market.
 At a minimum, the lofty U.S. sales targets set by former CEO Martin Winterkorn are under review and could be gone. Diess wants to focus on improving pricing and profits with better sport utility vehicles, instead of chasing big numbers, said a person familiar with the matter. Volkswagen hasn’t firmed up a plan to return to the premium price strategy in the U.S., the person said.
 Horn’s Departure
 For the more than 600 VW dealers in the U.S., it would be a disaster, Brown said. “We’ve got to be a real brand — and that means you have to go after sales volume. Anything else will be unacceptable.”
 Volkswagen of American spokeswoman Jeannine Ginivan declined to comment on the possible shift in strategy.
 The automaker was caught last year cheating on California and U.S. emissions tests for its four-cylinder diesel engines. Winterkorn resigned, and VW is facing lawsuits and massive fines. It’s yet to come up with a solution to bring its diesel cars into compliance.
 The sudden departure Wednesday of Volkswagen of America Chief Executive Officer Michael Horn — who drove the mass-market push — fueled concerns that a complete shift in U.S. strategy might be gathering steam in Germany, said Brown, co-owner of two VW dealerships in suburban Dallas.
 He said dealers want Volkswagen to stick with its current blueprint, and keep prices low enough for mainstream consumers. Dealers invested a lot in their showrooms and need bigger sales volume to make a profit on their bigger, more expensive stores, he said.
 ‘Severely Damaged’
 The National Automobile Dealers Association said in a statement Thursday the brand has been “severely damaged” and dealerships have been hit hard. “A critical step in this recovery will be for VW to honor the future product plan that Mr. Horn and VW dealers fought vigorously for,” the trade group said.
 When VW was gearing up for its mass-market push, its Passat mid-sized sedan had a base price of around $28,000 — $8,000 more than a like-sized Toyota Camry. VW sold 11,000 Passats in the U.S.; Toyota sold 350,000 Camrys. But Volkswagen hadn’t been looking for big numbers. The emphasis had been on engineering and driving performance, and the sticker prices meant the cars weren’t for everyone.