Volkswagen Is Now #3, But For How Long?
Congratulations are in order for the Volkswagen Group which confirmed yesterday that it passed the Ford Motor Company as the number three global automaker in the world 
by sales volume. On the back of rising sales, VW overtook Ford by selling 3.31 million vehicles during the first six months of the year while Ford sold 3.22 million units.
Volkswagen should enjoy their celebration for a while, but signs are pointing that this milestone could be short-lived.
In a column that ran in The Detroit News yesterday, Neil Winton has suggested that Europe’s mass automotive producers are in denial and will soon be facing production cuts. In, BMW, Daimler face reality, but Europe’s mass car makers are in denial, Winton mentioned that BMW and Daimler have both trimmed production and told shareholders that profits were dropping, while Fiat, Peugeot, Renault, and Volkswagen are telling shareholders to expect earnings to rise, though market trends are suggesting the opposite will happen.
Business Week took note of Volkswagen’s profits in a July article, noting that “…the emerging markets are propping up the European car industry.” VW sales are up in the US year to date, but down for all of North America and for Western Europe. Sales in Latin America and Asia are driving VW’s profitability and are the key markets for why VW passed Ford earlier this year.
In that article, written by Jack Ewing, he went on to say, “No doubt VW’s stable of smaller, more fuel-efficient cars is a positive. But in emerging markets the crucial issue is whether consumers respond to high fuel prices by shifting to smaller cars or by not buying cars at all. Because many emerging-market buyers are first-time buyers, there’s a risk that they will postpone purchases. Volkswagen also suffers from the strong euro, which raises the price of its products not only in the U.S., where sales slipped 0.4%, but also in countries such as China, whose currencies track the dollar.”
The current woes facing America’s Big 3 automakers are the same pains which are causing Toyota to cut back on its global sales projections and causing other automakers to examine their product offerings by adjusting production. VW could pull it off, but if fuel prices increase once again, then VW’s base could freeze up and push Volkswagen sales down below Ford who is working feverlishly to bring smaller, more economical cars to the market.
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4 Comments on Volkswagen Is Now #3, But For How Long?
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Paul Cartage on
Mon, 1st Sep 2008 3:07 pm
Volkswagen cars are mainly gas savers, that;s why they have a good chance to be at the top of most popular cars nowwadays… taking into account gas prices. And, anyway, I like Volkswagen. I own such a car - Rabbit’05. Great auto!
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