By on November 26, 2011

In an interview with Germany’s Handelsblatt, Volkswagen’s CEO Martin Winterkorn said:

„No question, 2012 will be come much tougher, particularly in Europe, and there especially in highly indebted countries like Italy or Spain.The market will shrink in 2012, and we will suffer from that. We expect the European market to get smaller next year. Also the developments in other areas of the world need to be monitored closely.”

On December 15, Winterkorn will prepare the Volkswagen management for the tough times. At a conference in Dresden, there will be “intensive discussions.” This according to an invitation Automobilwoche [sub] could get its hands on.

In Volkswagen-typical hyperbola, the „Strategie 2018“ has been renamed to „Mach 18“. It’s up to you whether you think this means 18 times the speed of light, or (read in German) „do it in 2018.“

Afterburners may be needed, because for the first time, Winterkorn is worried that he might fail:

Winterkorn warns:

“We will reach our Mach 18 targets only with a broad consensus in society.“

If, by 2018, Volkswagen won’t be he largest, most profitable, most admired automaker with the highest customer satisfaction – then it’s the society’s fault. No consensus. Forget about it. New strategy.

Volkswagen is facing more problems than just a soft Europe. There is the never-ending drama with Suzuki. In China, Volkswagen is growing so fast that it has trouble getting qualified personnel. Some factories even have problem getting enough electrical power. And that in a time when China wants to electrify its cars.

According to Automobilwoche, „Winterkorn is worried that the high speed of expansion could create similar problems for Volkswagen as it did fort he Japanese rival Toyota.“

All of this will be discussed on December 15th. It should become an interesting conference.



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16 Comments on “Volkswagen Is Getting Worried...”

  • avatar

    Might Winterkorn be saying that they will only reach their 2018 goals for profitability and revenue targets (which have never been revealed, I believe) only if the various countries reach agreement on how to resolve the current macroeconomic issues?

  • avatar

    Hopefully, VW being busy handling these problems means that it doesn’t have the time to try to trick Fiat into handing over Alfa Romeo. The death of Alfa Romeo (which a VW takeover would amount to, for all intents of purposes, even though the brand would live on) would be a lot more tragic than the death of Maybach, to put it mildly…

  • avatar

    Winterkorn’s comments are a combination of traditional Germanic hubris (“it’s everyone elses’ fault”)and steely-eyed recognition that growth at all costs can be both foolish and dangerous to long term health.

    So far, Herr Winterkorn has demonstrated his team’s ability to execute, improve and grow across almost all group brands. Let’s hope that their 2018 goal doesn’t sacrifice the solid improvements in reliability that VW has made over the last few years.

  • avatar
    The Doctor

    18 times the speed of sound, surely?

  • avatar

    That german bond failure last week was a shot across the bow of the good ship VWAG. He wouldn’t be doing his job if he didn’t adjust plans accordingly. As the Chinese say “interesting times.”

  • avatar


    ah yes. and they tried to sell 6 billion, only to sell 3.6 b.
    next year germany needs to sell around 300 billion in bonds to fill the gap. if unsuccessfull the printing starts. and hungary is already junked by moodys, italy’s 10y-bonds reaching 8% and belgiums almost at 6%. tja…

    • 0 avatar

      While this bond sale went poorly, short term German bonds have effectively negative interest rates. IOW, you pay them to hold your money. I think the same is true of assorted Swiss banks near the Italian border. Smart Italians know their banks and government are baked.

      Long term notes look justifiably spooky to investors. I doubt the Euro zone escapes a double dip next year. It could get very bad. It’s tempting to short the Euro aggressively to spin a return out of this possible train wreck.
      Interesting times…

      • 0 avatar

        But if the Euro zone is such a train wreck, why hasn’t the Euro fallen relative to the U.S. dollar?

        Two possibilities:
        1. Euroskeptic media in Britain, gloating at about 170 decibels, is being carried to conservative business outlets in the U.S.
        2. The U.S. is about as bad off as the average Eurozone country; somewhere around the level of France or Belgium.

        While number 1 is true, it doesn’t explain the situation as well as number 2. This makes shorting the Euro relative to the U.S. dollar quite risky.

      • 0 avatar

        Do not compare France with US. France still has AAA rating and sound energy policy.

      • 0 avatar

        Sound energy policy is key.

  • avatar

    If the 800 lb. gorilla of European auto manufacturers is getting worried, what does that mean for Opel and Fiat? With GM sending in the slashers and Sergio canceling Italian union contracts, it looks like they’re preparing for Euro-armageddon. Will Fiat-Chrysler become Chrysler-Fiat, Volvo leave Sweden and BMW-Daimler have to merge to survive?

  • avatar

    Herr Winterkorn what was it Hitler said about Von Ribbentrop? “With Von Ribbentrop it is so easy because he always blows .” “The others, they come to me and say we must be CAREFUL, exercise CAUTION etc.” “With Von Ribbentrop its much better because all I need do is to gently apply the brakes..”

  • avatar

    The Euro hasn’t fallen probably because a lot of European banks are selling foreign assets and bringing back funds to replace money being withdrawn due to increasing worries about bank solvency.

    That means the money has go so somewhere, but where? Is it to German bonds, or is there an equal amount of money going to the safer (!) US as is being repatriated?

    Anyways, I recommend for those who aren’t quite sure what’s going on or how serious the economic situation is (could be a lot worse than 2008) that they read this and its related articles.

    This special report is also good for more background/explanation.

    It all depends on whether the European Central Bank or Germany will put aside their principles and back the other European countries financially.

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