[buckwheat]

I'm sure there might've been some side effect, but I doubt that anyone that was shopping for a dirty diesel would've all of a sudden considered an R as they next best option..... but who knows.

I would be that person. Outside of a 5 cylinder Quantum, my Volkswagens have always been diesel (Rabbit, Jetta Wagon, Touareg) or the highest performance model offered at the time (Scirocco, GTI 16V, Corrado VR6). I'm deeply regretting not purchasing an Mk7.5 Golf R, holding out instead for an Mk8 model and subsequently crossing that off my list once the actual car was introduced.

Volkswagen does not make mass-appeal generic cars very well, or at least they have held zero appeal for me, but that appears to make up 95% of their current North American offerings.

 

[buckwheat]

...I can go weeks driving through my area and never spot a touareg of any generations but q7s and cayennes are everywhere. Just yesterday there was 3 cayenne and an rsq8 in the same lot at the grocery store. Plus there was always the image issue of a 50k-60k VW and people just weren't about spending that money.

You have to be careful when making generalizations based on "your area". I've lived in rural Alaska for over 10 years and have never seen a Cayenne nor an RSQ8, but I regularly see Touaregs. I personally have been tempted many times to buy a Cayenne, but there is a stigma in owning one in my community. Nobody questions my debadged Touareg/Tiguan/Atlas/Taos (the vast majority of my neighbors don't know the difference which is fine with me).

In some communities (I've spent way too many years in them), a Volkswagen badge would not be accepted by the HOA. In other parts of America, you wouldn't dare drive a "luxury" European brand (luxury Asian brands and $100,000 pickup trucks tend to get a pass).

The Touareg needed to fit in the spectrum between these two extremes. Apparently, the United States does not have the bandwidth to embrace a vehicle that approaches a Cayenne in terms of capability, but doesn't have the stigma(cache) of a Porsche.