End of an era

Alicia Vera / Bloomberg News

Employees wear T-shirts reading “#ByeByeBeetle” during the Volkswagen Beetle end of production celebration in Puebla, Mexico, earlier this month.

Volkswagen’s “Love Bug” has been squashed by the SUV boom.

The German automaker marked the end of production of the iconic Beetle at its plant in Puebla, Mexico, on Wednesday and wasted no time talking about what will take its place: a compact sport utility vehicle. It’ll be a beefed-up version of a model sold in China named Tharu, which internally is code-named Tarek even though a VW spokesman said that will change once it goes to market.

“We’ll adapt the Chinese model for this market,” Steffen Reiche, chief executive officer of VW’s Mexico business, said during an event at the Puebla plant. “Our version will be the stronger one, the rougher one compared to the Chinese one.”

Demand for the Beetle and other hatchbacks has been crushed by years of low gasoline prices and the American consumer’s appetite shifting toward SUVs and pickups. Trucks have been capturing record share of the U.S. market, prompting automakers including Fiat Chrysler Automobiles and Ford to drop many of the passenger car models from their lineups.

Production of VW’s new compact SUV will begin at Puebla in 2020, with the model reaching U.S. dealerships in 2021.

VW announced the plans about a month after Mexico became the first country to ratify the overhauled North American free-trade deal known as the U.S. Mexico Canada Agreement, or USMCA. The accord requires that 75 percent of vehicle content be sourced from North America to cross borders tariff-free.

The rules represent a “big challenge” for VW, whose regional content is now at 64 percent , Reiche said.

VW’s Puebla plant also builds the Jetta sedan and Tiguan SUV. Reiche said the very last edition of the Beetle will be sold online through Amazon.