By on January 31, 2013

In 2007, when Martin Winterkorn took over as CEO of Volkswagen, he said that Volkswagen wants to be better than Toyota, not just in units, but in profitability, innovation, customer satisfaction, everything. This morphed into the “Strategie 2018”, which called for world domination no later than what the name says. Today, Volkswagen changed its mind. Declaring an early victory, it wants to move on.

Volkswagen’s top managers already are working on some sort of a Strategie 2022, “as steady volume gains have already propelled the German group within reach of its current sales target for 2018,” says Reuters. Volkswagen’s labor chief Bernd Osterloh agrees: “We definitely need a new growth strategy.” Preferably one that does not include Toyota.

World’s Largest Automakers
Full Year 2012 Data
12M ’12 12M ’11 YoY
Toyota 9,909,440 7,858,091 26.1%
GM 9,288,277 9,023,502 2.9%
Volkswagen 9,070,000 8,160,000 11.2%
Source: Company data.
Toyota: Production. GM: Sales. VW: Deliveries.

Readers of TTAC know (ad nauseam, some will say) that Volkswagen ended the year 2012 with 9.07 million units delivered, putting in in rank three behind Toyota and GM.  Didn’t they want to be the biggest? Now, the target miraculously morphed to 10 million units, a number Toyota missed by a hair last year. This year, the 10 million are in at least theoretical reach of all of the top three. Despite having been given (very long) odds by TTAC to break the 10 million barrier this year, Osterloh thinks it won’t happen, and we think he’s probably right. However, Osterloh says Volkswagen “must consider whether 2018 is still the appropriate standard.”

Interesting. Actually, 10 million never was the goal. The goal was, as related to me by a Volkswagen top executive who was in the meetings, to be better than Toyota, not just in units, but in profitability, innovation, customer satisfaction, everything, no later than 2018. In 2011, the goal looked near: Not Winterkorn, but a giant floodwave had stopped Toyota, half a year later, torrential rains in Thailand drowned Toyota again. Volkswagen wasn’t ready to exploit the situation, instead, GM became #1. Now, Toyota is back, and looking stronger than ever. Meanwhile, Volkswagen is faced with a little trouble at home. I don’t blame Volkswagen for ditching the plan. Actually, I always wondered why Volkswagen would “do what CYA-trained managers usually are loath to do: Set bold and measurable targets.”


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9 Comments on “Volkswagen Chickens Out, Says Strategy 2018 Is Old Hat, Declares Victory, Goes Home...”

  • avatar
    bumpy ii

    It’s perfectly fine to set hard targets if you know that you’ll be churning out two new Five-Year-Plans before the due date on those targets comes around.

  • avatar

    VW, on a business culture level, severely lacks attention span. Its method of unit growth is limited to:

    1) Buy more brands. Maybe they can try some marginal Chinese brands next, to boost another 0.5~1M units.

    2) Explore new markets. Since the BRIC card has been so stale now, they can try to sell cars to African pirates.

    Of course, you can also improve by building better cars. But that will take too long. Usually 10+ years to improve your reputation. That’s just not realistic for VW.

    • 0 avatar

      Sorry, but this is just plain wrong.
      1) because VW hasn’t bought a volume brand in two decades. Last was Seat in ’94. Afterwards they bought Bentley, Bugatti and Lamborghini (together maybe 10k cars), MAN and Scania (not counted in the group volume) and Porsche (~100k cars a year, of which 60k were counted in 2012).
      Almost all of VW’s growth (+46% or +2.9 million cars/year) was natural growth in brands VW has owned for 20 or more years.

      2) because, while the biggest part of volume growth came from China, the other parts haven’t stood still. VW’s market share in Europe, North and South America, eastern europe is bigger now than it was a couple of years ago. The biggest share of volume growth will always be from emerging markets – because the “Big 3” markets have peaked and will no longer show significant amounts of growth. However, the “BRIC card” has not been stale at all, and will not be for the foreseeable future.

      Wrong also, because if there is a car company you cannot accuse of short-sightedness or “lack of attention” it is VW. That is a company that thrives on long-term planning. They have a rolling 5- and 10-year forecast and planning period!

      @Bertel: This is also where I believe this article is drawing the wrong conclusions. VW has to readjust their goals now – because the original goals aren’t bold enough anymore. Whatever the general media has made of them, the original VW strategy 2018 never mentioned Toyota. They said they wanted to
      – sell 10million cars
      – be the most profitable
      – have the highest customer satisfaction
      – have the highest employee satisfaction (IGM handwriting ;))

      Of course, this means measuring yourself against Toyota in 3/4 of the goals, but “sell more cars than anyone else” was never one of the goals.
      However, looking at today, it seems rather possible, that VW will reach one or more of those goals in 2014 or 2015. With VW planning horizons, that will be too late to set up new goals – so they will do that now. But thats not chickening out.

      I will bet you anything, that when a “strategy 2022” or “2025” emerges, goals 2-4 will be exactly the same. Just the volume number will be adjusted upwards…

  • avatar
    Polar Bear

    Survey time… UK car owner satsifaction ranking 2011.

    1. Lexus
    2. Honda
    3/4. Jaguar and Skoda tied
    5. Mini
    6. Mercedes-Benz
    7. BMW
    8. Audi
    9. Volvo
    10/11/12. Alfa Romeo, Toyota and Volkswagen tied

  • avatar

    So this means that the attack on Stalingrad is off? Bummer.

  • avatar

    You think the “customer satisfaction” part could have made VW rethink????

  • avatar

    VW forgot about two factors. Quality and the meaning of “Volkswagen.” I would take a Dacia over their expensive garbage.

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