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Market trends: Volkswagen eyes top spot

While Toyota and GM slug it out to be number one worldwide, there is another company claiming that it will surpass both by 2018 – Volkswagen.

At first sight, this seems absurd.

VW is famously the least cost-competitive major car company in Europe, relying partly on its brand to command higher prices, and partly on successful Audi and Skoda to bring home the bacon.

It is also a failure in the USA, still (just) the world’s largest car market – while Audi has made progress, the core VW brand is miles behind its 1970s heyday, struggling to sell anything except Jettas.

Expensive in Europe and nowhere in the US – it hardly sounds likely to cause trouble for Toyota. However, VW bosses are not fools and they seem pretty serious about their growth targets, so what is their secret?

Firstly, German costs will finally be reduced – after a 15-year period when VW mostly talked about cost cuts in Germany and actually made savings in overseas operations so that its domestic operations didn’t need to.

Legally, VW will cease to be a German company, so that it can simply bypass union influence on its supervisory board, while Porsche boss Wendelin Wideking will bulldoze through new processes.

He certainly needs to – VW boss Martin Winterkorn says that Toyota has a cost advantage of €3,000–€4,000 per car over VW.

VW says it will improve design – but can it? Apart from re-interpreting the Golf every seven years and turning the Passat into a successful near-Audi, what signs are there that VW is remotely a design-led company?

Smaller VW models have sold on the impression of quality and almost deliberately avoided anything that smacks of design flair – the current Polo and Fox are arguably the dullest-looking mainstream cars in their respective classes.

Also, Toyota is not going to obligingly sit still and wait for the Germans to overtake them – if there is one company in the world incapable of complacency, it is Toyota.

If VW does succeed in increasing sales by more than 50% worldwide, as it would need to in order to reach its target, the UK will be expected to play its part.

While VW has been a huge success in the UK over the last 15 years, almost tripling sales from 65,000 to around 200,000, it is still struggling to reduce its dependence on the Golf, which still takes half of all sales. UK sales staff can expect some pretty demanding targets for the next-generation Polo.

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