VW reveals race to overtake GM, Toyota

[FloydHendershot]

http://news.yahoo.com/s/afp/20090312/ts_af..._20090312185951

VW reveals race to overtake GM, Toyota

WOLFSBURG, Germany (AFP) – Volkswagen is accelerating on record profits to overtake loss-stricken giant General Motors (GM) and Japanese Toyota within nine years, its management revealed boldly on Thursday.

The German giant, the biggest auto maker in Europe, is putting its foot down in the fast lane with the intention of becoming the biggest auto group in the world by 2018.

The gap is big, but the fuel tank of profits is powerful.

"I see Volkswagen in pole position ... after the crisis," chief executive Martin Winterkorn told a press conference here in the north of Germany.

"We are staying in the fast lane and the fuel tank is well topped up."

Volkswagen (VW) is the third-biggest auto manufacturer in the world, selling 6.3 million vehicles last year. GM and Totoya each sold rather more than eight million.

But GM is tottering close to bankruptcy despite huge US state aid, and Toyota expects to run up huge losses for its 2008-2009 year to the end of March.

VW, by contrast, made a record net profit of 4.7 billion euros (6.0 billion dollars) in 2008, a disastrous year for leading auto groups in general, and it expects to make a an operating profit this year, albeit less than last year, finance director Hans Dieter Potsch said.

Winterkorn warned, however, that business conditions this year would be "extremely difficult" and that sales would probably fall by about 10 percent.

The group might even report a loss for the first quarter. Potsch said that the latest data pointed in that direction since sales for January and February had fallen by 15 percent from the equivalent figure last year to 809,200 vehicles.

However, this was a smaller fall than that experienced by all sales by auto makers throughout the world which had contracted by 23 percent, VW said, lauding the performance of its small, and low-pollution cars, and the range of its models sold also under the brands of Skoda, Audi, Seat and Scania.

Even the involvement of the regional state of Lower-Saxony with an interest of 20 percent, which has been the subject of controversy for being outdated, is no longer criticised at a time when many governments are rushing to shore up stricken industries, including vehicle makers.

Winterkorn said that "many competitors envy us" because of our long-term shareholders in the form of the regional state and the auto maker Porsche, which holds more than 50 percent of the equity.

However, this did not discourage the group from seeking state guarantees of up to 2.0 billion euros (2.56 billion dollars) from the federal government in Berlin for its VW bank.

And it helps to explain why VW was cautious on Thursday towards the prickly case of Opel, the German and European arm of GM, which is a direct competitor of VW but is looking for German state help to survive.

Potsch observed: "If there has to be aid, then (it should be) on a fair basis." Opel had to prove that it could be viable, he said.

Winterkorn said that he expected to see a concentration in the global auto industry eventually.

He forecast that one manufacturer would survive in Japan, one in China, "two or three in Europe" and one in the United States.

And he was confident that Volkswagen would still be there in the fast lane, among the "winners" in the new "champions' league."

Meawnwhile, the annual report published on Thursday showed that Winterkorn himself is in the fast lane: his total remuneration more than doubled last year to 12.7 million euros, owing largely to the exercise of options to buy shares.

In 2007, he earned 5.1 million euros.

Remunderation for the five members of the board was rather more than 45 million euros from 16 million euros in 2007.

The stock options, granted at an advantageous price as a way of rewarding executives if success drives up the value of the business, have risen sharply.

At one point toward the end of last year, Volkswagen shares rose above 1,000 euros per share, owing to heavy speculative trading when Porsche was manoeuvering to gain control of the group. The closing price of VW shares on Wednesday was above 210 euros.

[Intrepidation]

This isn't new, they announced last year they planned to take over the world.

[FloydHendershot]

This isn't new, they announced last year they planned to take over the world.

by Lenaig Bredoux Lenaig Bredoux – Thu Mar 12, 2:57 pm ET

WOLFSBURG, Germany (AFP) – Volkswagen is accelerating on record profits to overtake loss-stricken giant General Motors (GM) and Japanese Toyota within nine years, its management revealed boldly on Thursday.

Consider it updated.

http://www.cheersandgears.com/index.php?showtopic=19999 ??

I have serious doubts they'll make it (on the volume front - profitability is another issue), but I would not laugh at this. Look at how people laughed at Toyota and the other Japanese manufacturers 40 years ago, and look where they are now. Many things can change in a relatively short period of time.

Edited March 14, 2009 by FloydHendershot

[CARBIZ]

The irony that Ford and GM considered VW unworthy of taking over at the end of WWII.

Although this reads like just another press release, kudos to VW. It is important to have goals. Any business major knows that. Whether the goals are acheivable or not is an entirely different matter. But having the local state openly invested in your business and not having other states gloating and/or kicking at you (as in America) has got to be a big plus, too.

If I were VW I wouldn't be gloating too much, however: they alone were positioned to dominate the small car market in North America at the end of the 1960s - what the hell happened? Toyota, Honda and others sell way more compact cars in what is (was?) the largest car market in the world. VW should have surpassed GM years ago, if they hadn't farted around with lackluster products in North America for the past 35 years.

But I guess the Press would rather print their press release without those type of negative remarks.

[Satty]

How does VW plan to pass GM when they dont have a single RWD V8 sedan with cash on the hood?

[Navy Seal]

I own a VW, it's the biggest POS I ever had the unpleasure of owning. I would never buy one again.

[Drew Dowdell]

The only reason we don't hear more about VWs quality issues is because they are a relatively small fry compared to the other brands in the U.S.

[ZL-1]

I remeber that.

I'm still not laughing at the plan, even though doubts persist. Essentially about how the industry will look like in 5 or 10 years. I'll say angain that a lot of things can change in a very short period of time.

[Satty]

In December 2008, GM reported deliveries of 221,983 vehicles. In the 2008 calender year, VW reported 223,128.

I dont think VW is planning on dominating GM and Toyota in the U.S. Its going to be Europe, Africa and the non-Japanese, non-Korean parts of Asia where VW is going to look for sales. Places whose drivers dont require 27-way adjustable seats, or power windows, or turbos, or 9-speed automatics. Hell, they could dust off the classic Beetle, put it back into production, and sell a million of them a year in China and India.

[Drew Dowdell]

Hell, they could dust off the classic Beetle, put it back into production, and sell a million of them a year in China and India.

A mildly modernized version of the Beetle would kill the Tata Nano in India. Especially if it was built there.

[Lamar]

I've noticed that any time a company tries to surpass GM, they encounter GM's problems. Case in point: Toyota.

[ZL-1]

I dont think VW is planning on dominating GM and Toyota in the U.S. Its going to be Europe, Africa and the non-Japanese, non-Korean parts of Asia where VW is going to look for sales. Places whose drivers dont require 27-way adjustable seats, or power windows, or turbos, or 9-speed automatics. Hell, they could dust off the classic Beetle, put it back into production, and sell a million of them a year in China and India.

Focusing on where growth is is the smart thing to do. If VW Group falls less than GM and Toyota globally during the downturn, they'll be in a better position to gain share whenever the economy picks up.

[Satty]

A mildly modernized version of the Beetle would kill the Tata Nano in India. Especially if it was built there.

Not much modernization required. By the time they quit making them in Mexico, the Beetle was fuel injected, had a catlytic converter and electronic ignition. The only thing they would really have to modernize is the emissions system, I doubt ZLEV status is possible with the ancient H4, but I bet it could be far cleaner than anything Tata or Chery could come out with.

[CARBIZ]

The only two old cars I see a lot of around here are the original Beetle (and judging by the bumpers and lack of headrests, some of them are very, very old) and old Chevy Monzas. I did see a Ford Pinto today, though. The original Beetles were pretty hard to destroy, although they had the level of sophistication of a roller stake - that was their true beauty. In the absence of rust, they live forever in South America.

But that is a far cry from building a modern, reliable car with airbags, ABS, all the requisite sensors, mult-like suspensions, etc. and making those indestructible and affordable. It's with those items that VW seems to be the most vulnerable. They know how to build a solid car, but it's the peripheral electrics, etc. that are their Achilles heel. Since Brazilian cars don't have any of that, they last a long time here.

[Intrepidation]

I wouldn't mind owning an older Beetle, they have that cuteness to them the new one could never match. It would be a brilliant move to start making them again for countries like India and China, maybe find a way to sell them in the States too. Although our regulations requiring every car to survive a 150 mph impact with a battleship would probably make that impossible.

[Satty]

They were built and sold in Mexico until 2003. And those Beetles could be brought to the U.S. and driven here as long as they were registered in Mexico.

[Nick]

The greatest part of the old beetles: RWD.

[Satty]

The greatest part of the old beetles: They float.

Fixed

The greatest part of the old beetles: Their engines can be torn down and re-assembled in 45 minutes.

Fixed, again

[Nick]

Very true...perhaps I'm somewhat partial to them because my mom and uncle were lovers of old VW's and were quite involved in Beetle clubs. In fact, my uncle owned a VW repair shop. They are cool old cars...even cooler fixed up.

[PurdueGuy]

Here is a major problem for consideration:

What happened to Toyota when they decided to gun for volume (GM)? Their focus on volume took their focus off of quality, and quality dropped. I would say this took Toyota quality from good to mediocre. So what happens to VW if their quality, which is already probably sub-mediocre, takes a hit as they focus on volume? Yikes!

[MyerShift]

I must say, VW does have solid, nice feeling cars, but in my own experience, they have a long way to go.

From a failed transmission to breaking vent knobs, and the various and random electrical glitches, there is no way they'll be number one in the U.S. at least any time soon.

[regfootball]

I own a VW, it's the biggest POS I ever had the unpleasure of owning. I would never buy one again.

LOL nearly everyone i know who's owned a VW recently says the same thing. How does VW plan to take over the world without repeat buyers?

[regfootball]

any carmaker that wants to lead the world in volume needs to be a huge player in the US. Toyota got that. Hyundai is trying now for that.

VW so far is not. They have a market a little cornered on the hip and urban crowd. However, in order to bust it in volume, and there are only so many hip urbanites, VW will have to go the way of Toyota and Hyundai and start fleet dumping and saving themselves by zero and making your payments when you lose work. And also if they flood the market like a grand am then their perceived value will nosedive which will piss off the current VW bangers who still stick with it because its hip, even if their car is in the shop 6 times a year. So expect a day when its not impalas and G6's being advertised used by the truckload for 149/mo 72 months 6.9 apr see fine print for more details. I am surprised VW really wants to go this way.

And really, VW wants to be number one but they don't even have a decent aluminum 4 cyl non turbo in their core product here in the US. If VW wants to be mainstream here, then they need to pony up with some decent non turbo, non premium gas, non diesel, non iron block 4 bangers.

remember when mits tried to whore its way to market share? Is this what VW wants to do?

Edited March 15, 2009 by regfootball

[SAmadei]

[sarcasm] VW has too many brands! Why would anyone buy a Audi when its a just an overpriced Volkswagen?!? [/sarcasm]

Seriously, if it wasn't for all the ground in the US that Volkswagen has to gain, I would say Volkswagen is quite successfully beating GM in the multibranded attack to the top.