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Can VW Overtake Toyota and GM To Become #1?

hpmctorquehpmctorque Posts: 4,252
Volkswagen recently said that by 2010 it can produce 10 million vehicles and pass Toyota and General Motors, to become the world's largest car company.

According to the (London) Sunday Times, "To those who suggest that closing a 3m vehicle gap (Toyota produced 9.4m last year) is a very tall order, company management explains that, in 2006, the number of conventional passenger cars made by Volkswagen and Toyota was fairly similar -- 5.2m for Volkswagen and 5.5m for Toyota -- and that the difference is made up by 4x4s, people carriers' and light trucks."

Volkswagen introduced a full range of these multi-purpose vehicles only recently, but apparently they'll play an important role in VW's future growth.

The big question I have on this is whether VW's more exciting designs and dynamic driving experience can offset Toyota's superior reliability record, and/or whether VW can narrow the reliability gap sufficiently to reach this ambitious goal. Also, I wouldn't totally discount the possibility that GM may retain its #1 position (or regain it, if it loses it in '08). Richard Waggoner has publicly stated that GM will not passively concede its world sales leadership to Toyota, but will, instead, fight to retain it. Official statistics indicate that GM squeaked by Toyota in '07, but, as we know, Toyota has the momentum.

One thing to consider is that because Toyota has been so strong in the U.S., surpassing Chrysler, then Ford in our market, we may tend to overestimate Toyota's strength vis-a-vis GM and VW worldwide.

Your thoughts on all this?
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Comments

  • bumpybumpy Posts: 4,435
    China. The more important questions is whether VW has the production capacity and supplier infrastructure to build 10 million cars, because they need to have it in place now to build 10m cars the year after next.
  • fezofezo Posts: 9,391
    I can tell you that where I was in China five and a half years ago there were Volkswagen a plenty. Mostly diesel Jettas that were taxis. They were all over the place.
  • hpmctorquehpmctorque Posts: 4,252
    Whether or not VW has the production capacity - and my guess is that they probably do, with overtime - 2010 seems unrealistically soon for such a change. I think it will take many years, and much better performance in North America, if VW is to indeed achieve this goal. Is it possible, at a later date, say, by 2018? I think it's possible.
  • gagricegagrice San DiegoPosts: 29,056
    I think as the Chinese market expands, VW will be one of the leaders. Toyota and the other Japanese companies will have a harder time in the market. There is still a lot of animosity between the two countries.
  • fezofezo Posts: 9,391
    Yes, they are starting to let Toyota get a foothold but there is long animosity between the two countries.

    Volkswagen has already established a firm foundation in China. If their market continues to grow the way it is now VW will be in good shape. Number 1 by 2010? No, I don't think so but I could see them selling that many cars not long after that.

    That said, GM isn't exactly unheard of in China either. Buick there has the market segment that they'd like to have over here.
  • lemkolemko Posts: 15,196
    Buick sells all kinds of cars in China from a subcompact called the Sail to a really nice luxury LaCrosse and Royaum. Geeze, if NA Buicks were that nice, who needs a Cadillac? I'm starting to see a nice change for NA Buicks in the form of the Enclave and Lucerne. Heck, even the LaCrosse as it is is a quantum leap from the dismal Centuries and Regals of the recent past.

    VW may very well overtake Toyota and GM in the world market if it captures the majority share of the Chinese market, but it won't overtake either in the NA market.
  • fezofezo Posts: 9,391
    I can't imagine how VW makes a better dent in the NA market. They had it just about perfect in the 2000 model year with a Passat as perfect as it was going to get and then had to deal with typical VW issues. Glitchy electrical systems and overall lousy reliability.

    It will take many years of reliable Volkswagens to get rid of that image.
  • gagricegagrice San DiegoPosts: 29,056
    VW has been held back selling their real economy cars here with diesel engines. I think much of their reliability problems are in those engines they bang together for our market. I had no issues with my 05 Passat TDI. I would imagine worldwide they sell over 50% diesel cars.
  • fezofezo Posts: 9,391
    How long did you have that Passat? I have a friend who had a 2000 (yeah, we're doing anecdotal evidence for a minute) with the six and it seemed pretty good for a few years but then had some really major issues.

    I very nearly bought a 2000 Passat when I got my Accord. Having once owned a Rabbit I got cold feet.... Maybe just as well. The only VW dealer within convenient range burned down a few months later.
  • gagricegagrice San DiegoPosts: 29,056
    I kept the Passat for a year and sold it. That was my plan to start with. It was too small and low to the ground for my taste. I wanted to see just how much I could make and was very happy with $3000 profit after driving it just 8000 miles. Try that with any gas vehicle. Supply and demand has kept the VW diesels high on resale especially in CA.

    PS
    I could have sold 10 at that price. My phone rang off the hook for a month after the ad was pulled.
  • gagricegagrice San DiegoPosts: 29,056
    Thinking about it. If VW would ship low mileage VW TDIs to their dealers in the CARB states they could make a killing. Not sure how they would export them from Germany.
  • fezofezo Posts: 9,391
    What a good idea. Wish I'd thought of that in 2005...
  • steverstever Viva Las CrucesPosts: 41,309

    Moderator
    Minivan fan. Feel free to message or email me - stever@edmunds.com.

  • andys120andys120 Loudon NHPosts: 16,688
    There's no way for VW to surpass both GM and Toyota in worldwide sales before perhaps mid-century. Toyo is well-established in the Americas and Asia outside of China. Europe is their weak spot but getting less so all the time.

    GM now dominates the China market having wrested it away from VW. I don't see how VW comes back in China, a araket where their own domestics are beginning to show strength.

    2000 BMW 528i, 2001 BMW 330CiC

  • scape2scape2 Posts: 4,119
    has deep pockets and great resources. However, I don't see them being any real large threat to GM/Toyota. Also, don't count out the Koreans. Hyundai is no slouch. Thier products have improved greatly just in the last 5 years to match even the Japanese/American vehicles. VW is not going anywhere. I see VW making its foot print in Eastern Europe/Russian markets.
  • nippononlynippononly SF Bay AreaPosts: 12,693
    Yes, but at the same time Hyundai's sales have slumped badly since mid-decade.

    Don't count out Honda - I know they are smaller than the industry giants right now, but they just keep growing and growing, even as the rest of the industry suffers.

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • steverstever Viva Las CrucesPosts: 41,309
    "Jacoby acknowledged that VW "did a lot of things wrong" to earn a U.S. reputation as unreliable and costly to maintain. But he said improved quality — "our warranty costs are down considerably" — and a new three-year free maintenance offer should raise perceptions."

    Volkswagen's U.S. plant may make Porsches, Audis

    Moderator
    Minivan fan. Feel free to message or email me - stever@edmunds.com.

  • nippononlynippononly SF Bay AreaPosts: 12,693
    Porsche had already announced that no way was the U.S. plant going to build any Porsches?

    VW may face the same problem as the domestics on the quality issue - it takes a few years to trash your rep, but FIFTY to get your rep back, if you EVER recover completely.

    I think it's totally unacceptable that VWs had problems that couldn't be fixed at all by the dealers, and other problems for which parts were backed up 6-8 weeks or more while the cars sat undriveable.

    Any company that would act with that little quality control and that little forethought would make me hesitate STRONGLY before buying one of their cars, even a decade later.

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • larsblarsb Posts: 8,204
    VW has about as much chance as catching Toyota by 2010 as I do of winning the PowerBall Lottery two weeks running.

    Why is this even a serious forum?
  • grbeckgrbeck Posts: 2,361
    Because VW management itself said that the company would do this. At the very least, it's an opportunity to comment on what this says about VW management.
  • gagricegagrice San DiegoPosts: 29,056
    I think it's totally unacceptable that VWs had problems that couldn't be fixed at all by the dealers, and other problems for which parts were backed up 6-8 weeks or more while the cars sat undriveable.

    All you have to do is follow the Honda and Toyota threads to see this happens to both of them also.
  • lemkolemko Posts: 15,196
    ...it is a possibility if VW is very popular in China. If the Chinese market explodes and VW has the major market share, they could overtake both GM and Toyota.
  • gagricegagrice San DiegoPosts: 29,056
    Why is this even a serious forum?

    I believe VW is number one is several markets. The EU, South America, Mexico and China. Plus they are a lot more enjoyable to drive than anything Toyota builds.
  • nippononlynippononly SF Bay AreaPosts: 12,693
    Neither Toyota nor Honda has ever issued a recall for a problem which made the affected vehicles undriveable and for which the required parts were so back-ordered that many owners had to wait 6 to 8 weeks or longer.

    That is the exclusive domain of VW and Ford (Firestone recall), I believe. And in Ford's case, the vehicles could be driven (at the owner's peril), although their recommendation was not to.

    2013 Civic SI, 2009 Outback Sport 5-spd (stick)

  • british_roverbritish_rover Posts: 8,476
    Oh I am sure I could find a couple of recalls or at the least TSBs that caused cars to sit for six to eight weeks from almost any brand. A situation like that is a lot easier then you think to happen.
  • larsblarsb Posts: 8,204
    Well, GarO, that would matter in sales numbers if more than 2% of people chose a car using "enjoyable to drive" as a primary decision point.

    But they DON'T.

    Sometimes a person might narrow it down to two cars, and choose the "more fun to drive" car over the other primary contender.

    But no one I know or have ever heard of starts out their car search by saying, "I'm going to go buy the MOST FUN TO DRIVE car I can find."

    At least not for a primary vehicle. Maybe a middle-aged man who wants a fun sports car might use that as a primary decision point.

    Ride and Handling never even come into play at all with most people. Car suspensions have advanced to the point where almost every car has a good ride and handles ADEQUATELY.

    Unless you are living on or commuting over or across a LONG curvy mountain road on a daily basis, ride and handling are not big sticking points for the VAST majority of people.
  • larsblarsb Posts: 8,204
    Here are some other pages that list why people choose the cars they choose.

    Survey 1

    Survey 2

    Survey 3

    I'm having a hard time finding a survey that even puts "fun to drive" in the conversation at all.

    Can you find one?
  • steverstever Viva Las CrucesPosts: 41,309

    Moderator
    Minivan fan. Feel free to message or email me - stever@edmunds.com.

  • andys120andys120 Loudon NHPosts: 16,688
    VW is no longer number one in China, GM passed them in sales a couple of years ago IMO.

    2000 BMW 528i, 2001 BMW 330CiC

  • moocow1moocow1 Posts: 230
    Interesting topic...unfortunately I don't think VW has any chance until they do improve their reliability. That's the #1 reason I would never buy a current VW. And sadly I want a turbodiesel too. Get VW to up the warranty and get to at least mid-pack reliability and I'll start looking at them again.
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