By on February 3, 2010
Former DCX CEO Juergen Schrempp had a vision. He had a vision of creating a Welt AG. He wanted to dominate the world. In order to create that vision, he set about paying for car companies like Chrysler and a controlling stake in Mitsubishi. 10 years later, DaimlerChrysler is nothing but a footnote in the automotive history books. Now Volkswagen want to emulate that vision, only this time, they want to do it properly.

The Wall Street Journal reports that Volkswagen AG is launching an aggressive strategy in order to expand its company. It aims for sales of 8 million in the short to mid term and sales to exceed 10 million by 2018. Considering that Volkswagen sold 6.3 million vehicles in 2009, an increase of 3.7 million vehicles in 8 years is a tall order; an increase of 462,500 vehicles every year for 8 years. But not only are Volkswagen aggressively expanding their sales, they’re also paying attention to their profit margin, too. For the first 9 months of 2009, Volkswagen’s Ebit margin was 2%, they want this figure to, eventually, expand to 5%. With strong growth in countries like Brazil & China and their strategic investment in Suzuki (who are big in India, also another growing market), it’s very possible that Volkswagen can reach their lofty goal, but all of this has an echo of something. Quick expansions, cost cutting, ambitious goals….haven’t I heard this before?

Today VW held a London investor conference, where they aired more details of this ambitious plan. Businessweek reports that one of the first points was to streamline manufacturing across all of Volkswagen’s brands in an effort to adjust faster to market demands. As predicted from yesterday, Volkswagen will focus on growth in emerging markets, highlighting their strength in China and strength in India, via their tie-up with Suzuki. In fact, Volkswagen CFO, Dieter Poetsch reckons that emerging markets may account for 52% of their sales by 2018 (outweighing even VW’s ambitious US-market plans).
Another outcome from Volkswagen’s London conference is the surfacing of an old rumour. Businessweek’s article also says that Milano Finanaza (an Italian newspaper) are reporting that Volkswagen are still interested in buying Fiat’s Alfa Romeo brand. Michael Brendel, a Volkswagen spokesperson called the report “speculation”, but it could be a good move in Volkswagen’s plans for world domination. Cars like Alfa Romeo with better reliability? Who wouldn’t want to buy a car like that?
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8 Comments on “Volkswagen Guns For Number One...”

  • avatar

    Quick expansions, cost cutting, ambitious goals….haven’t I heard this before?

    Big differences:
    * VW has far more of a cost problem than Toyota ever did
    * Toyota’s growth was more or less organic; VW is intending to do the same via brand management

    To extend the metaphor, Toyota is probably more akin to Ford than to GM, who is really more of VW’s analogue. And by that logic, if Kat Watanabe was Toyota’s Jacques Nasser, they’re actually in really good shape.

    • 0 avatar

      If you look at the volumes, the whole VW “has so many brands” thing really is overblown. You have four volume brands – Audi, Skoda, Seat and VW itself. VWN and Scania are commercial vehicles (and VWN isn’t really recognized as their own brand by most people anyway, they share the VW Logo after all), Bugatti, Bentley and Lamborghini are more or less collector toys – expensive ones maybe, but really not important when talking volume or brand cannibalization.

      The oh-so-streamlined Toyota (USA) has…3 brands (Lexus, Scion and Toyota). In the rest of the world there also is Daihatsu and JDM there is Hino Trucks. The suzuki cooperation at the moment more or less equals the Subaru thing Toyota has going. In fact, when looking at the US, Toyota offers more brands than VW…shocking…

      As to the organic growth vs. brand buyup: The last big volume brand VW has bought up was Skoda in the late 80s/early 90s. Yet in the last 10 years (only numbers I could find) they have grown by more than 1.6 million cars.

      And there is still the question of whether co-brand management can not work, just because GM failed miserably with it.

  • avatar

    Like I said in the other VW bit today, when the Germans get their feces amalgamated and maintain their focus it should put fear into everyone around them.

    As for Alfa Romeo, I want to buy one no matter who owns them!

    Make mine a Spider with a JTDM engine please.


    • 0 avatar

      But, on the other hand, the last time the Germans really had their feces amalgamated and seemed poised for dominance they invaded the Soviet Union. As I recall that went rather badly for all involved.

      And I too want an Alfa and I can’t even explain why, I just do.

  • avatar

    I may be in the minority here, but if they bring the Polo here in 5-door variant, with the TDi and manual tranny without major decontenting, price it at $15k or so for a well-equipped model, I’d be in line for one. But like I said, one person wanting/waiting does not a major success in the market make.

  • avatar

    I’m skeptical that VW will pull off it’s stated goals. My reason –
    the goals are numeric.

    To paraphrase (and likely oversimplify) Dr. Deming – why set a goal of 10M cars for 2018? Why not 20M or 40M? And why wasn’t the goal set last year? Or ten years ago.

    Likewise with the EBIT margin. Why 5%? and if numeric goal setting works, why wasn’t the goal set years ago?

    Qualitatively they would like to have better customer satisfaction than Toyota, but that probably can’t be achieved when the mind is concentrating on numerical goals.

  • avatar

    Whip me, beat me, make me write bad checks, but don’t ask me to buy a Volkswagen. I’m not that masochistic.

  • avatar

    Yeah better reliability? That’s news to me. From my perspective and experience. And why would they want Alfa? They have Audi. Leave well enough alone.

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