Strategie 2018: Bludgeoned Volkswagen Plans Counter-Attack
A few months ago, Volkswagen’s 2018 goal of world domination was in gripping distance. In a record run, and helped by tsunamis and floods, Volkswagen had finished 2011 as world’s second largest automaker after GM and before Toyota. Overtaking GM was seen as a matter of short time. Six months later, the advantage is slipping away. A visibly rattled Volkswagen now musters all energy to stay in the race.
Volkswagen’s new Hoffnungsträger, freshly-minted China chief Jochem Heizmann, plans to build and sell 4 million cars in China by 2018, he told the German magazine Focus. Last year, Volkswagen sold 2.3 million units in the Middle Kingdom. Heizmann’s conservative predecessor had budgeted 3 million units until 2018. To a delighted board, Heizmann now promises a million more.
Every unit counts in the race to the top. Volkswagen redoubled its efforts to buy U.S. truckmaker Navistar. According to Financial Times Deutschland, Volkswagen is interested in taking over Navistar. Navistar is a bargain, its stock lost half its value in four months. Navistar would round-out Volkswagen’s SCANIA and MAN offerings. MAN already makes engines and components for Navistar. There could be a bidding-war: Fiat is also said to be interested in Navistar. Volkswagen however has the bigger war chest.
Volkswagen will most likely finish the year ranked third. It will have to work hard on not to slip further. Home market Europe, where Volkswagen sells around half of its global volume is a mess. Other markets, or new brands will have to make up for the losses at home if Volkswagen’s Strategie 2018 is supposed to succeed. A reinvigorated Toyota and a disencumbered GM will do everything to keep VW in its third place.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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I heard Navistar stock is taking a beating due to new EPA regulations on diesel engines. Fleets bought up a slew of the "old" engines before the new much more expensive EPA compliant diesel engines came out and now sales are way down. This may however be a good time to buy stock in companies that produce DPF.
This is good news for me, as a strong sceptic of the VW-myth. I would also like to point out the difference between 'until' and 'by'. Saying that they'll build 3 million units until 2018 implies they'll build 3 million units before ceasing production in 2018. Admittedly,I've only ever met one or two Germans/Austrians who don't simply translate the native 'bis' directly. No reflection on Mr Schmitt's English though, as there is no problem with it. And before anyone challenges me to speak German, don't. I can.
I'm sure VAG is pursuing this goal because of bragging rights and the expected sales as a result. Everyone loves a winner. But as Toyota found out, relentlessly pursuing revenue led to quality issues that diminished the brand's sterling reputation and that may take years to restore with the customers. Not to start a VW bashing thread, but they certainly have some work to do in this department and focusing entirely on market share may end up backfiring on them. Is is so bad to be number 3 in the world, if you're still making huge profits?
Tacky, very tacky choice for your map. Great Uncle was 82nd Airborne, bias here.