By on July 11, 2010

Two news items are unnerving Japan today: The ruling DPJ party seems to be heading towards a solid defeat at the upper house elections. And Volkswagen has lost all respect for the Japanese competition. The enemy Volkswagen now fears most is – dou shiyou -

Korea.

“I have the most respect for Hyundai,” said Volkswagen’s Martin Winterkorn to Germany’s Focus Magazin. The Korean currency is low (as opposed to the Japanese …) and quality is high. “Hyundai now knows how to build good cars,” said Winterkorn.

That immediately alerted The Nikkei [sub] that headlines “Volkswagen Sees Korean Car Makers Bigger Rivals As Japanese.”

A few days ago, Korea attracted the attention of Volkswagen’s grand seigneur, the octogenarian honorary chairman Carl Hahn , who warned in an interview given to Korean Times that “Korea is in a position to have an aggressive price policy, which obviously won’t be possible in the long run.”

Japan is – how shall we say it – a bit ambivalent towards Korea. If the doitsujin think that the Koreans are worthier opponents, then this is indeed cause for alarm.

Or maybe VW is just making a strategic retreat from their Strategie 2018. Unseating Toyota by 2018? Nicht mehr nötig! Keeping those verdammte Koreaner in check is what counts now!

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23 Comments on “Volkswagen Loses All Respect For Japanese Auto Makers. Or So They Say...”


  • avatar
    educatordan

    So German automakers are smarter than Japanese automakers? Sounds like it to me.

    BTW are those purple pot leaves as a back ground early on in the video? I was trying to figure that out.

  • avatar
    geozinger

    VW’s management is probably correct, forget the Japanese, worry about the Koreans instead. At least in North America, where VW wants to be the biggest in this market. Strategie 2018 seems a little ambitious.

    At least VW understands that H-K will be a force to be reckoned with here in the ‘States, I wish the US domestic producers would recognize that also.

    The bloom is off the vine for the Japanese makers here in the US. Commodity automobile consumers (sheeple) are fickle and go for the latest, greatest cheapest thing they can find, H-K is on the upswing in that regard. Look at all of the positive reviews for Hyundai and the new Sonata; no one has said it outright, but I will. Camry-killer.

    Suzuki and Mitsubishi are increasingly irrelevant to the US market, and Honda and Nissan are wandering their way into mediocrity with Toyota not too far behind. Toyota has been the default choice for the folks looking for reliable transportation for a long time, but Hyundai has taken mind share from them, starting this year. Just as the Japanese took mind share from the domestics 30 years ago, it is now happening to them.

    How VW plans to fit into all of this is beyond me, but at least they know what the others don’t. We’ll see how it all fits into Strategie 2018…

  • avatar
    Cammy Corrigan

    To be honest, if the Germans take their eye of the ball, that’s their problem. To ignore the Japanese, is a mistake, just ask Detroit. In an industry as competitive as the car industry, EVERYONE is to be considered a threat. Not just who the flavour du jour is. I second Herr Schmitt’s notion that this is a ploy to distance themselves from “Strategie 2018″. “Oh We’ve changed tact, Toyota is no longer our concern, it’s these pesky South Koreans, we need to beat them. Which means we’ll need another 10 years to formulate a plan against them”.

    This is just a prime example of Germans thinking they’re superior to everyone else. In my opinion, the Germans and Japanese should stay well clear of each other…

    (Has Bertel bit yet?)

  • avatar
    L'avventura

    “Japan is – how shall we say it – a bit ambivalent towards Korea.”

    This is certainly not the case, the Japanese have been very public about their concern of Korean competitiveness.

    Article dating back to 2006,

    We are worried about Hyundai: Toyota
    http://www.freerepublic.com/focus/f-news/1555926/posts

    Its a sentiment that’s been shared amount most Japanese automobile makes. S. Korea has a weak currency, well-managed by their government, the Japanese have largely abandoned policies to weaken their currency over the last few years.

    Moreover, VW and Hyundai compete in emerging markets, which have increasingly been their core markets. Outside of Suzuki, the Japanese haven’t been aggressive in these markets until recently.

    However, “Japanese”, “Korean”, “German” are unnecessary abstractions, you should be wary of every competitor based on their circumstances and attributes, and grouping them on racial lines is inefficient; Honda is a very different company then Mitsubishi, Toyota, or Suzuki after all…

  • avatar
    John Horner

    Having the “most respect” for Hyundai does not mean VW has “lost all respect” for Toyota. Look at what Hyundai has achieved over the past ten years vs. Toyota in that same period. Hyundai has come out of nowhere to become a major player. Having great respect for Hyundai’s accomplishments as a competitor doesn’t mean ignoring or disrespecting other competitors.

    Japan is now a high cost place to produce products while Korea remains a relatively low cost source. From a German perspective they might also be imagining what would happen if North and South Korea ever managed to re-unite as East and West Germany have done. Doing so would add another source of low cost labor to Korea’s manufacturing powerhouses.

    • 0 avatar
      Dr Strangelove

      “… what would happen if North and South Korea ever managed to re-unite as East and West Germany have done. Doing so would add another source of low cost labor to Korea’s manufacturing powerhouses.”

      In Germany it certainly did not work out that way. The cost of labor is slightly lower in East Germany than in the West, but much higher than in most of Eastern Europe. Little reason to invest there, and East Germany has become, in the words of former chancellor Helmut Schmidt “another mezzogiorno, only without mafia”.

      Sad thing is it was totally predictable from the decisions made back in 1989. Hope the Koreans will be smarter.

    • 0 avatar
      BDB

      Immediate re-unification would be a disaster for South Korea.

      First, North Korea is a bigger portion of all Korea than East Germany was of all Germany.

      Second, North Korea is much more impoverished than East Germany was. East Germany in 1989, while having all the endemic problems of a Soviet-style economy, was the most advanced economy in the Eastern Bloc, even more than to Soviet Union itself. I know, that’s like saying “prettiest house in the trailer park” but compare it to North Korea. In East Germany there were shortages of things like coffee and sugar, in North Korea there’s a shortage of things like rice and coal.

      Re-uniting Korea, if it ever happens, will be a much, much, much harder task then the already difficult German reunification was. It would be a huge drag on South Korea economically.

  • avatar
    mpresley

    From a German perspective they might also be imagining what would happen if North and South Korea ever managed to re-unite…

    Ummm…that would be more cars for the Pongyang traffic girls to direct, no?

  • avatar
    SomeDude

    I think VW’s worries are justified. It’s true that you should look out for all potential competitors, but, unlike the Japanese who are mostly trying to regroup these days, Hyundai is engaged in a major offensive. Plus it has access to immense resources, basically the resources of the entire country of South Korea (flagship company status and corruption, together, can rake in a lot of dough). It follows that, if Mr Lahood’s fight against Toyota aims at making life a bit easier for GM, he’s shooting at a wrong target. Hyundai is an imminent danger here and, should anything go wrong with GM’s “rebirth”, it’s going to be more than happy to serve GM’s former clientelle.

  • avatar
    Jack Baruth

    Manga Kenkanryu! Soon available in German!

  • avatar
    cafe

    Oh god! An Axis Powers Hetalia fanvid on TTAC!

  • avatar
    mdensch

    It’s just possible that Dr. Winterkorn was doing some strategic thinking aloud. VW may be starting to see that it could realize its goal of market domination by marching in place while Toyota’s market share is steadily eroded by both its own continuing missteps and the growing strength of the Koreans nipping at its heals.

  • avatar
    Tstag

    Forget the Koreans and the Japanese. It’s the Chinese everyone should fear. They have over 100 auto makers surely a few of them will succeed. And look at the likes of Cherry and SAIC to see the quality is getting better. Also their strategy’s are crafty MG and Volvo are now both Chinese. Brands that we in the West know and like.

    Take the new MG 6 for example. Not a Ford Focus beater just yet but getting very close in engineering terms anyway. And before anyone mention’s safety, check the MG range out, all boxes are ticked.

    Sure Korea looks good right now. But give it 5 years….

    • 0 avatar
      John Horner

      China would be my number one long term competitive threat concern were I an auto industry executive. That’s why I think Ford handing Volvo’s brand and capabilities over to a Chinese company is a strategic blunder of the first order. Classic short term American management thinking!

    • 0 avatar
      rgil627il

      off yourself please.

  • avatar
    ra_pro

    I have said it many times but if you look at the electronics industry as a car business proxy you will see that Chinese are nowhere as a major brand-name electronic producers even after 30 years. Sure they produce shiploads of gadgets but mainly as cheap “no-name” stuff (not necessarily bad but certainly not leading edge) or as producers for major Japanese brands. In the meantime Samsung is quickly taking over Sony as the leading electronics producer. They already have the best HD TVs and the rest will follow. Hyundai is Samsung of the biz. Sharp is the inventor of LCD tv and only a few years ago they were still the technology leader in the field. Now despite the fact that they have the most modern TV factory built in Japan they are so far behind Samsung in design and technology that I don’t see how they can ever catch up.

    • 0 avatar
      George B

      ra_pro, you are at least partly incorrect. The Chinese contract manufacturers build high end brand name electronic products. My employer uses Foxconn. http://en.wikipedia.org/wiki/Foxconn Before the startup company I worked for was acquired by the current large company, we used Creation Technologies in Plano, TX, but high volume electronic manufacturing has moved to China. Sad that US robots are not cost competitive with Chinese robots when you add in US regulatory and loan costs.

      What I think you were trying to say is that there is something different with the Chinese as compared to the Japanese and the Koreans that makes it difficult for the Chinese to build a worldwide brand. Might be weak protection of intellectual property and a willingness of the Chinese to leave a company and start a competing one. Mixture of entrepreneurship and blatant theft.

    • 0 avatar

      Some are suffering from myopia. The Chinese know the value of brands, but there is very little knowledge of creating brands. 50 years of communism has some impact. Give the Chinese some time, and they will learn. They are the quickest learners I have seen.

      The Koreans weren’t the brightest when it came to branding (remember Lucky Goldstar?) but they learned.

      Japan has a rich culture of branding, but even they had to go through the “Technics”, “National” and “Panasonic” phase.

      Every big American advertising agency has at least one office in China, and they are doing their darnest to teach the Chinese branding. Did I mention that they are quick learners?

      Arrogance and underestimating your competition are deadly sins.

  • avatar
    wsn

    VW’s poor performance in NA (2% market share), has nothing to do with the Japanese, or Koreans or Americans.

    It’s themselves …


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