VW Sets Goal of Being Largest Auto Company in World

By Brendan Moore

11.05.2007

According to an article in Automotive News earlier today, its wholly-owned German publication, Automobilwoche, has obtained internal Volkswagen documents that lay out VW’s goal of overtaking both Toyota and GM in volume in the next ten years and thereby becoming the world’s largest auto maker.

The plan is named “Strategy 2018”, and one of the cornerstones of the plan is double the amount of vehicles VW currently exports to the U.S. VW currently exports approximately 397,500 vehicles to the U.S. annually.

VW also plans to develop vehicles specifically for the U.S., citing the fact that they currently sell vehicles here with some features that have little or no value to Americans, thus driving up the price of those vehicles needlessly. The document also mentions that VW should have a “Plan B” in terms of additional North American production in the U.S. since the Pueblo, Mexico plant is currently running at capacity and the dollar continues to get battered by the euro in the currency markets. Their target locations are, where else, in the Southeastern United States, where there is a non-union workforce and BMW and Mercedes-Benz already have plants and a mature supplier network.

A mere six months ago VW was saying that they would double their sales in the U.S. by 2011, and we commented then that we just couldn’t see that happening with the lineup they had and the future short-term lineup they had revealed at that point. Now, the plan has the additional requirement of growing the ability of the U.S. market to absorb twice as many imported units from Volkswagen while meeting their overall volume goals, as well as perhaps simultaneously coordinating the launch of a new production facility in-country.

That’s a pretty big hill for VW to climb.

Of course, its worth noting that it’s not just the U.S. that is supposed to carry the load for Volkswagen’s ambitious plans – it is no secret that VW also plans to aggressively increase the amount of vehicles it sells in developing countries, whether those vehicles are produced locally or exported from a VW plant somewhere else. But the plan there is a bit more solid in terms of attainability. Demand is growing exponentially in those countries.

Demand in the U.S. is not growing even a little bit, everyone has too much capacity, General Motors is showing new signs of aggressive life in their home market, the Japanese all look pretty damn strong, the Koreans are expanding their offerings, the Chinese will be here soon and so will the Indians.

One must assume that Volkswagen must be feeling awfully confident.

COPYRIGHT Autosavant.net – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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12 Comments

  1. I think VW has lost it.

    How can they reasonably expect this to happen? I mean, c’mon, freunde, get a grip.

  2. It’s not that far-fetched. VW is coming on pretty strong internationally.

  3. It IS far-fetched, and I agree with grubermeister, these guys have lost touch with reality. They are living in some parallel universe where, apparently, there is no one else competing for the hearts and monds of the car buying public. Did they come up with this plan after a week-long drunk?

  4. In 2006 GM did high 8 million production, Volkswagon group did 5.6 million. Toyota was in the 8 millions.

    Both Toyota and GM are growing as is the world automobile market. So I think minimum VW will have to be looking at around 11 million vehicles in ten years if they wanted to be top spot. So 5.6 million – 11 million is 5.4 million more units. 365,000 in America is 6.7% of that goal.

    They’ve got to be thinking mainly developing markets. For example VW is neck and neck with GM in China, both going to be between 800-1million units this year. China’s auto market could triple in the next ten years.. So VW could conceivably grow from 1 million to 3 million units in China. The competition will be fierce there.

    I think the eastern block nations could go to like 10 million vehicles by 2017-2018.. so VW maybe could pick up 750,000-1million more there.

    Then there is merger possibilities, if VW is profitable or stock rises they could buy somebody.. maybe fiat or PSA?

  5. IMO its is acheivable……

    I say this because VW have a whole heap of new products coming online….

    -New Mini Car – up! = 3 variants
    -New Cheap Car – Gol NF = 5 variants
    -New Small Car – Polo V = 4 variants
    -New Beetle II fits somewhere (US) = 2 variants
    -New Golf VI
    -New Jetta/New Compact Sedan (US/China)
    -New Passat = 2 variants
    -New Medium Sedan (US/China)
    -Scirocco
    -Touran II
    -Sharan II
    -US Minivan
    -4×4 my bet targeting 4runner or Pathfinder
    -Touareg II
    -RPU Pickup targeting Frontier/Nav and Tacoma/Hilux
    -Microbus (Europe)
    -T6 Transporter

    Then you have some variations of the above platforms for certain countries.

    Also add in VWs plans for production of some sort in Turkey (LCVs), India (Cars), Russia (Cars), Indonesia(LCV), Vietnam(unknown), Thailand (Parts then Cars) and North America (Cars).

    and add in Audi, Skoda and SEAT and VW may easily takeover Toyota Group as the biggest manufacturer.

    There are hurdles VW need to jump eg reliability of parts, customer satisfaction and dealership service rejuvenation.

    With VWs new ethos of bringing old ways back aka building a peoples car and longer life in models (remember Beetle ads claiming we never change shape just improve).

    This IMO is the new improved leaner forward thinking VW.

    BTW thanks Brendan for the article 😉

  6. IMO its is achievable……

    I say this because VW have a whole heap of new products coming online….

    -New Mini Car – up! = 3 variants
    -New Cheap Car – Gol NF = 5 variants
    -New Small Car – Polo V = 4 variants
    -New Beetle II fits somewhere (US) = 2 variants
    -New Golf VI
    -New Jetta/New Compact Sedan (US/China)
    -New Passat = 2 variants
    -New Medium Sedan (US/China)
    -Scirocco
    -Touran II
    -Sharan II
    -US Minivan
    -4×4 my bet targeting 4runner or Pathfinder
    -Touareg II
    -RPU Pickup targeting Frontier/Nav and Tacoma/Hilux
    -Microbus (Europe)
    -T6 Transporter

    Then you have some variations of the above platforms for certain countries.

    Also add in VWs plans for production of some sort in Turkey (LCVs), India (Cars), Russia (Cars), Indonesia(LCV), Vietnam(unknown), Thailand (Parts then Cars) and North America (Cars).

    and add in Audi, Skoda and SEAT and VW may easily takeover Toyota Group as the biggest manufacturer.

    There are hurdles VW need to jump eg reliability of parts, customer satisfaction and dealership service rejuvenation.

    With VWs new ethos of bringing old ways back aka building a peoples car and longer life in models (remember Beetle ads claiming we never change shape just improve).

    This IMO is the new improved leaner forward thinking VW.

    BTW thanks Brendan for the article 😉

  7. VW might be able to do it if they get phenomenol growth everywhere, but to rely on all that growth in the US is just not realistic. This is the toughest, most competitive market in the world, and every car maker wants their piece of it. VW is not going to just stomp the competition in the US.

  8. There could be a possibility despite then this scenario have very slim and thin chances to happens is to buy some stakes of a US automaker (Ford or Chrysler) as a partner to realize their goals, VW sells to Chrysler some 4-cyl turbo-diesel for Chrylser models exported to Europe and they’ll offer their own version of the Chrysler minivan in North America soon. Also when Chrysler solded their South American operations to VW, VW continued to make the former Hillman Avenger aka Plymouth Cricket aka Dodge 1500 in Argentina to the early 1990s.

    If VW grabs Chrysler before Renault, the various Skodas and Seats could be sold as Dodge. (Some wiseguys could do some unorthodox name-games with the Seat nameplate)

    Ghosn might dream of the same thing I mentionned then Renault could target Chrysler but VW could step on it and outsmart Renault.

  9. It’s doable, not through US growth but through growth in Eastern Europe, Turkey and China.
    And VW is nuts if they think they will significantly increase imports to the US as the Us dollar continues to slide.

    Now I want to know what these features are that add cost but are not appreciated by american consumers. Side marker lights can’t cost that much.

    My sister just sold her VW Jetta, it was an OK car, but certainly no better than the comperable mid-size Ford, but cost about 10% more.

  10. The U.S. plan is completely unrealistic. Period. But its possible they could get to their goal of world domination through increases everywhere else.

  11. This can only happen if they buy someone, and it would have to be someone big in the U.S. and have some internatonal heft, too. WHich sort of points toward Ford.

  12. I hate VW and I hope they fall on their big ass. Their cars look good, but they’re worse than almost anything except some domestics. Bad transmissions, lousy engine durability, electric systems suck, you name it. They deserve to go out of business, not get bigger.

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