Volkswagen Guns For Number One
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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Whip me, beat me, make me write bad checks, but don't ask me to buy a Volkswagen. I'm not that masochistic.
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.