By on June 11, 2012

 

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.

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14 Comments on “Strategie 2018: Bludgeoned Volkswagen Plans Counter-Attack...”


  • avatar
    Robert.Walter

    Fiat, the little Hoover?

    If Fiat were to buy Navistar, then it would have effectively accomplished a two-step take-over of the former International Harvester Co. Although the contemplated take-over of I.H.’s Truck & Engine Group would be direct, the purchase of I.H.’s Farm Equipment Group came in two or three steps via J.I.Case and Tenneco Corp.

    Interesting also, is that although in 1998 Ford sold its Heavy Truck Div. to Daimler, which subsequently rebranded it as Sterling before shutting It down (after ca. decade of ownership) Ford does maintain a medium-truck presence. And where it gets interesting, is that Ford’s N.A. mediums are built in a JV operation essentially run by Navistar, and Ford’ European mediums are built by Fiat’s IVECO subsidiary (after Iveco bought these assets from Ford in 1986). So if Fiat were to acquire Navistar, Fiat would control the surviving assets and market of Ford’s one-time truck (medium-only as heavy died with Daimler) and Ford-new Holland operations (which it purchased from Ford in 1985).

    Note, as I reflect on these consolidations and others, Fiat may have been more responsible for consolidating the contemporary motor industry through the purchase and or take-over of more brands than any other OEM than VW, and where arguably Audi/VW, were the faster movers on the car side, Fiat has been arguably faster on the truck and farm/industrial side.

    Kaiser vs. Caeser?

    Whereas the Germans have always seemed to favor big quick bolt-on acquisitions in industry as in war (black-hole-like approach), the Italians have seemed to expand their empire incrementally and quite gradually over years (more like a Hoover than a black hole).

    • 0 avatar

      Very interesting points you make. Seems like Iveco is growing the world over. Even in Europe, they are growing in vans and up to medium duty trucks, though not so succesful in heavy trucks. In Latin America (specially Brazil) they are gaining ground in all areas. Smaller trucks at the expense of Mercedes and heavy trucks against everybody else. In heavy trucks though VW is also growing in Brazil.

      Remember that Fiat also bought American CASE a while ago.

      Interesting thing though that back in 2008 or thereabouts there was talk of spinning off the whole truck-agricultural-construction builders. The world changes fast.

      Fiat’s interest actually makes sense. With their important presence in Europe, rapidly growing share in Latin America, a North American heavy-duty presence would give them a strong global presence.

    • 0 avatar
      Athos Nobile

      Robert, I think Ford stopped making medium duty truck in Europe after they sold their line to Iveco. Those trucks are still alive in other markets: Brazil (as Fords, still Cargo) and in India (as Ashok Leyland), don’t know who’s the owner of the later.

      I remember that Sterling also sold a version of the Cargo in the US, but not sure for how many years.

      Iveco already assembles or manufactures Navistar trucks down here, and if I am not wrong their site was actually an International site before.

      The Eurocargo concept itself borrowed a lot of the good stuff from the Ford design.

      Iveco indeed has done a good job consolidating brands. But I was “born” to this industry working with International and pre-Sterling LNT8000 Ford trucks. It would break my heart to see International as a brand disappear to become… whatever.

      Those Ford trucks, and specially their parts catalogs taught me among others, that the best part numbering system I’ve seen so far is Ford’s one. In just one sight it tells: model, year, part (engine block, piston, etc…) and variant.

      • 0 avatar
        Robert.Walter

        You’re right, Ford Cargo spawned a number of vehicles once it was rebranded by acquirers, and far as I know, you are right about Ford Cargo still being produced in some of the “smaller” markets world-wide. (I was always a fan of the CL-9000 and it’s cab-over sister myself; two of the most elegantly styled trucks ever produced!)

        Best numbering system ever. Hard to believe how one remembers all the 14401, 4705, 3D657, 3E751, 3C662 and 3C529 (possibly you recall some of these as 3504 or 3B676) one has developed over the years!

      • 0 avatar
        Athos Nobile

        I wish I have designed, but I do remember 6XXX was engine related parts, those codes you mentioned are either steering or brakes stuff, can’t remember.

        What I do remember is that E9HZ-XXXX-XX means 1989 heavy truck part. F3HZ, 1993. Same prefix ending in HT meant factory part code. I can’t remember the codes of the F-series trucks parts, but I had to order quite a few 10.25″ diff parts since they only lasted a year if the guys didn’t use the 4WD.

        I also dived into the circa 1982 parts manual and since I also had to check Fuso’s manual, what really surprised me was that the 90’s Japanese truck had a brake system quite similar to what Ford used in the end of 70’s beginning of 80’s. The 90’s L-series trucks had much a reduced parts count and what seemed a simpler, more “elegant” design. That day a new idea came to my mind, Japanese “high tech” is kind of BS.

        And those Mitsubishi trucks could take the mother of all abuses (Fords too).

        If you liked the CL-9000, you would really like the Brazilian styling. But the Italians took the design a couple of steps further and that’s why the Eurocargo is one of the most successful medium duty trucks out there.

  • avatar
    mitchw

    Not quite getting the historical analogy here, Bertel. You think the plan is desperate madness, or is that a sketch of Madonna’s booby?

    • 0 avatar
      Sundowner

      It’s a map of the Battle of the Bulge from the later part of WWII in Europe. It was arguably the last-gasp major offensive on the part of the german military before the Allies started caving in on them. I’m not sure the situation is that dire for VW, or that the 101st airborne are going to hold a VW plant in deepest enemy territory, but it certainly made me chuckle.

  • avatar
    grzydj

    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.

  • avatar
    iainthornton

    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.

    • 0 avatar
      Robert.Walter

      The word that would have to be searched in the original VW german language commitment, the one that would clearly differentiate between the two states you mention, would likely be “ab”.

      Germans don’t typically say “we will do it by”, but rather are more likely to say “we’ll do it ‘from’ such and such date.”

      • 0 avatar
        iainthornton

        My point is that they would use ‘bis’, which would translate directly to ‘until’.
        Which is in my experience why German people say that.

        My example that I used to show what ‘until’ would imply in English would use ‘ab’, I agree.

  • avatar
    LeeK

    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?

  • avatar
    el scotto

    Tacky, very tacky choice for your map. Great Uncle was 82nd Airborne, bias here.


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