Can VW Overtake Toyota and GM To Become #1?

gagrice

One example of how bailing out GM helped California - GM has ~225 dealers there (the largest car market in the US).

How many dealers did Obama put out of business is a more important number? CA is not GM country. They would not have been missed here by many more than the 4700 that lost their jobs at NUMMI.

You too can own shares of VW and reap the profits. That whole concept of the money staying in the country of origin is a bit dated. Who really owns GM is the bigger question? How much of the GM profit goes to the Chinese government?

“Shanghai Automotive Industry Corporation (SAIC) and General Motors (NYSE: GM) are announcing today that an agreement has been reached with the governments of the United States and Canada that will allow SAIC to purchase the shares of GM owned by the respective governments. The sale is expected to be completed by this time next year pending approval from U.S., Canadian and Chinese government regulators.”

Should the respective governments sign off on this deal, SAIC will take a 36-percent stake in GM (SAIC already bought a one-percent stake in GM during the company’s IPO), a controlling interest. In effect, GM will be owned and under the control of SAIC, which will make combined company far and away the world’s largest automaker by volume. It goes deeper than that, though. SAIC is owned and controlled by the Chinese Government. If this deal goes through, GM will essentially be sold to the government of China. How could our government let this happen? As is so often the case, it’s all about the money.

The “bailouts” of Chrysler and GM have been fairly unpopular with the American public. Many have accused the government of overstepping its authority and wasting taxpayer money propping up two companies who failed in their own right, and this negative perception has dogged the Obama Administration for years now. The Treasury gained some good PR last year when it sold roughly half its stake in GM, but for many opponents, it wasn’t enough. With the 2012 election looming, the Obama Administration is likely looking for a quick way out of this situation, and it appears the Chinese made them an offer they couldn’t refuse.

stever

The important number is how many jobs would have been lost without the bailout.

We'd still be in recession and VW wouldn't be producing as many cars in Chattanooga, assuming they had opened it and not mothballed it, like Toyota Tupelo did for a while.

The EU has been known to give VW loans too.

gagrice

You are sounding like Rocky. Michigan IS NOT the center of the universe whether you believe it or not. You are making the assumption that 100,000 GM employees are that big of a deal. GM goes out of business Ford, TM, VW and the rest pick up the business. We have lost 5 million manufacturing jobs at least over the last few years. And we are still plugging along. Stock market at an all time high. If the number ONE selling vehicles from GM are down to 40% US/Canada content. We are NOT that big of a part of the auto manufacturing puzzle. Toyota, Nissan, Honda and now VW are building their big sellers in the USA with more US content. That is where the jobs are in US content. Not Canadian or Mexican content. US Content is the key.

stever

You're the one focusing on Michigan - I never mentioned it.

Although my niece's husband (also down in Chattanooga) makes the occasional trip to Detroit for his company, which supplies stuff to the auto industry. Guess where else he has to travel to?

Yep, China. But also California. :shades:

And the revived auto industry is leading the Dow higher and has made the US a bright spot in the global economy. (guardian.co.uk)

gagrice

Ah, but one good year does not mean a turnaround. And how much of the profit made in the lucrative China market stays in China? Looks like the more cars GM sells here the less money they make. Hmmmmm

DETROIT — General Motors said on Thursday that its net income declined 14 percent to $865 million in the first quarter, as it earned less money than a year ago in the surging North American car market.

http://www.nytimes.com/2013/05/03/business/gms-quarterly-profit-falls-14.html?_r- - =0

stever

Some of the profits went to product development and GM, somewhat surprisingly, is doing better in Europe than Ford. And VW has a ways to go to catch up in the US (from this link). We should sell F and get GM.

gagrice

Not sure who compiles your data. Subaru has NOT sold as many vehicles in the US as VW through June of 2013. Of course that makes the whole chart questionable.

VW=206,792
Subaru=204597

http://www.media.vw.com/newsrelease.do;jsessionid=0A4AAA44562C9D76765853828C63E8- 9F?&id=1410&allImage=1&teaser=volkswagen-america-reports-june-2013-sales&mid=

http://media.subaru.com/newsrelease.do;jsessionid=DDF7A3C8BC6F9224283125C2E2D8A9- CE?&id=454&allImage=1&teaser=subaru-reports-42-percent-increase-june-sales-best&- mid=1

To keep the auto industry in perspective. Apple has more than enough cash to buy Ford and GM. Consumer electronics is the big fish in the World pond. And we don't manufacture squat for sale.

At least VW represents the auto industry in the top 25 most profitable corporations globally. By the time GM becomes truly profitable it will be totally controlled by China. At least Ford made it without being bailed out. Too bad they don't build anything I want.

I know you have to defend GM as they have plastered this site with ads. You cannot do a comparison without having a GM product inserted even if it is not comparable in any way.

fintail

I wonder if any data exists for that - how much of the money made in China ever escapes, and where it goes.

Would also be interesting to see the value of any IP stolen while in China vs monies made.

stever

"Market Share by Manufacturer is the percentage of industry sales for the months indicated for each manufacturer displayed."

So yeah, Subaru outsold VW for June, 2013.

texases

Looks like you're both right, June sales were higher for Subaru, 2013 sales through June were higher for VW.

But VW can't be on their path for USA sales, Hyundai/Kia are kicking their asterisks...

gagrice

The USA is a tertiary market for VW. Or maybe 4th important market. Depending on which news source you believe VW sales surpassed GM last year. And net profit was more than GM and TM combined. VW is showing the world how to run a company profitably. With arguably the best vehicles for the money. At least my quest for a new SUV brings me to that conclusion.

ohenryx

Perhaps I'm just too USA-centric (or possibly just showing my age), but it seems hard for me to believe that Volkswagen could manage to become (possibly) the largest car manufacturer in the world while ignoring (or nearly ignoring) the US market.

I guess we're not in Kansas anymore.

stever

It's hard for me to see how they do so well (profit-wise) with their labor costs. Not only does the union have board representation, I've seen reports that VW uses a lot more warm bodies to build their cars than other manufacturers.

Maybe they're using the Henry Ford method of paying their workers enough so that they can afford to buy new VWs every three years. :shades:

gagrice

In Germany the Unions and management work together to build a better product. In the USA it has been an adversarial relationship since the inception of the UAW. The Unions in the USA want to squeeze every dime and the executives do the same. Consequently the product suffers. Keeping in mind that VW is by far the most profitable automaker. That was not enough for the German financial market.

VW said its net profit soared by 40.9% to a record 21.7 billion euros (US$28.6 billion) in 2012 as revenues rose by 20.9% to 192.7 billion euros and deliveries to customers were up 12.2% at 9.276 million vehicles.

The group said it would propose an increased dividend of 3.50 euros per share for 2012 compared with 3.00 euros per share a year earlier.

Looking ahead, VW said it expected to "outperform the market as a whole in a challenging environment" and deliveries to customers would increase year-on-year.

"However, we are not completely immune to the intense competition and the impact this has on business," it cautioned.

While 2013 sales revenues were expected to exceed the 2012 level, "given the ongoing uncertainty in the economic environment, our goal for operating profit is to match the prior-year level in 2013," VW said.

Despite the carmaker's strong 2012 performance, analysts had been expecting an even stronger gain in profits last year.

As a result, VW shares were the biggest losers on the Frankfurt stock exchange in afternoon trading, plummeting 4.26% while the overall market was showing a gain of 0.81%.

http://www.industryweek.com/finance/volkswagen-profit-40-2012

gagrice

it seems hard for me to believe that Volkswagen could manage to become (possibly) the largest car manufacturer in the world while ignoring (or nearly ignoring) the US market.

Keep in mind China is the largest market now. VW and GM dominate that market place. VW is much more discriminating in what it wastes money on than GM. I am not aware of any auto companies VW bought and then dumped at a huge loss like GM. Every time they dump a nameplate it costs the company millions. Olds, Pontiac, Saturn, Hummer, Saab and soon Opel.

GM barely edged out VW in 2012 by a handful of cars. How would GM have done without the rental market to dump cars into? See many VWs on the rental lots?

Look for VW to slowly grow the US market. They will also avoid the UAW. That was not a good relationship on their last foray into the US manufacturing market.

texases

"Look for VW to slowly grow the US market. They will also avoid the UAW. That was not a good relationship on their last foray into the US manufacturing market. "

While you're right, they've claimed they're going to nearly double sales, to 1 million (VW+Audi) by 2018. That's not gonna happen IMHO...

gagrice

VW should be over 600K this year. That gives 5 more years to reach the goal. A lot can happen in that time frame. Toyota and GM cannot give away cars forever and stay in business. They are both making about 4% profit. Not much room for error. I think Ford could sneak past all of them. They are making about 15% which is real good profit.

berri

I think VW has one major hurdle to US success that has existed for many years - it's dealers tend to suck in my experience!

stever

Sounds like the sales dip woke 'em up a bit.

"Halfway through an ambitious, 10-year plan to more than triple sales in the United States, Volkswagen has hit a bit of a rough patch: Sales and market share are down slightly in the first half of the year, and some analysts blame an aging lineup.

But the German automaker promises new models, engines and upgrades to meet its goal.

Some auto analysts are skeptical that VW can hit the 800,000 goal by 2018.

“It’s really an enormous number,” said Michelle Krebs, an analyst at automotive research site Edmunds.com. She noted that VW would need to average about 80,000 vehicles in additional annual growth, starting next year, to meet the target."

VW vows to spruce up lineup after sales dip in U.S. (Detroit News)

gagrice

I am finding that out. I have visited 3 VW dealerships looking for just the Touareg TDI that I want. The followup is non existent. With Mercedes and BMW, some dealerships bug you to death. Two of the salesmen were great took us on long test drives. No pressure what so ever. I asked them to let me know if they get one in the right color. Nothing so far. A VW dealer in Utah has one and was aggressive until I told him what I was willing to pay. He has not called back. I offered the Edmund's TMV for San Diego. They must not be so liberal in Utah.

berri

Wait until you buy one and have to deal with the service department!

gagrice

Actually I was far better treated by the VW service department when I owned the Passat TDI than either the Toyota or Lexus dealers. Unfortunately they sold the VW dealership to a big conglomerate.

berri

My BIL bought a diesel Passat a few years ago (the version with the nice interior before they cheapened it up). It's quite nice and hard to even tell it's a diesel when driving it. He's had pretty good luck with it as well. He bought it because like you, they take a lot of highway trips and he prefers driving over flying. Their other car is a minivan. He ends up mostly using the van on trips now though because it has more room and comfort on the road. He said he'd probably not get another diesel car because between the much higher purchase price, service costs and fuel, he doesn't think it's actually all that much cheaper to operate on the road than the minivan. Of course, he has to use the dealer and I don't think VW dealers are known for low cost or inexpensive parts. The two independent shops he likes won't touch it and the place that does diesel work won't work on European models.

gagrice

My limited dealer experience with VW was good. They charged less for a synthetic oil change than Toyota using cheap dyno oil. We also have many European repair places in San Diego. Many specialize in Mercedes and VW. We also have a real good Lexus independent shop. I am not a fan of dealer service. I also don't care for Nissan. I bought the 7 year 75,000 extended warranty. When the reservoir for the windshield washer fluid sprung a leak it cost me $268. Not covered and required the removal of a fender to get to it. So I would not put much weight on after sale service as a buying factor. The Touareg has free service for 3 years 36k miles. I think BMW offers that as well. Mercedes dings you big time for service. They want $2429 for 4 yrs 40k miles. If that is not a ripoff I am not sure what is. Four oil changes at $600 a pop. I have just about settled on VW. If I can find one I like. And at the price I am willing to pay.

berri

Sounds good then. But are you sure you're ready for the road trip change from a big SUV to a sedan? I think that really was my BIL driving factor in leaning against another one.

gagrice

I am going from a large SUV to a mid size SUV. The Touareg TDI is about 16 inches shorter than the Sequoia. The Touareg handles much better, more responsive, maneuverable, quiet. Won't know about the comfort until I put 700+ miles in a day of driving.

Something interesting. The Germans, Japanese and Koreans all have SUVs in the mid size 188-190 inches. The Domestics seem to have avoided that size. They have big and little SUVs. None worth owning in my opinion.

berri

I think it was either you or Fintail maybe that posted awhile ago that diesels make more sense than hybrids and I tend to agree. I think the Europeans make the best small diesels, so I don't understand why Ford put their emphasis on turbo's instead given their large European presence. I guess a turbo has less price premium than a diesel, but I think people equate a turbo with a jet aircraft when in fact it is more a tack-on to a conventional piston engine. The turbo's and hybrids don't seem to be getting all that close to their EPA numbers. A turbo spools up the engine RPM's (and a piston engine has a lot more moving parts that get strained than a jet) while a diesel can just loaf on the Interstate.

texases

" while a diesel can just loaf on the Interstate. "

?? All diesels are turbos. No difference there. And the problem with diesels in the US is the emissions. Anything bigger than a compact requires urea injection to meet the much more stringent US standards.

The basic technology is about identical today between the two: turbos, direct injection, high compression.

berri

The point I was trying to make was that a conventional piston engine is more complicated than a diesel and works harder putting out the high torque. A jet engine doesn't really have all those many parts moving around in it. Good point about EPA impacts. I'm curious how the turbo emphasis will work out for Ford down the road. So far, I don't see a lot of other car companies jumping onto that bandwagon in anywhere near that extent.

gagrice

Even the small diesel engine in the Cruze has to have urea (AdBlue). So far VW is the only company that has built a diesel that can get by without it. In their smaller vehicles. I just found out they needed Urea to get the Passat TDI to pass. That seems to be the standard method to get NOX to a low level. With the current price of AdBlue it is a non issue.

texases

"a conventional piston engine is more complicated than a diesel "

That used to be true, it really isn't any more. At the Dallas car show they had the hood up on a Ford diesel pickup - looked like the inside of the space shuttle! Miles of tubing, intercooler, coolers, turbo plumbing. And that's a vehicle without the urea injection.

I put it mostly down to the (absolutely needed) pollution controls needed to deal with the diesels.

Mr_Shiftright

I would agree. Modern diesel engines don't have a "simplicity" advantage anymore, nor a maintenance advantage for that matter.

The reason Ford is betting on small displacement high output ICE turbos is because that's the way the technology is swinging to meet future CAFE standards. I've been reading about all kinds of nifty new ICE engine designs as well as adding electronic supercharging to a conventional turbo system (sort of a 2-stage boost), along with higher voltage electrical systems.

I don't see diesels as a large part of the future of compact car engines in the USA. In larger SUVs and trucks, yeah sure, they'll be with us a long time.

Nor do I see Americans opting for diesel luxury sedans in large numbers.

ohenryx

My crystal ball is rather hazy these days. But I have to say, the mpg numbers coming from the diesels is very impressive. If I really needed to get great gas mileage, I would much rather do so in a Jetta with TDI than in a Toyota Yaris.

texases

You don't have to settle for a Yaris. A number of gasser compacts now get the same or better mpgs than the Jetta TDI. This is from a recent Motor Trend comparison:

Mr_Shiftright

Well it's more about "trending" than crystal balls...the big money still seems to be on ICE powerplants.

I'm sure the Big Boys boardrooms have hashed out the diesel vs. gas discussion as much as we have....mpg vs. cost per gallon vs. marketing challenges vs. cost to produce, vs. USA historical car buying preferences, blah blah blah.

ohenryx

You need to provide some annotation for that chart. Are you trying to say that a Cruze with a gas engine is getting better mpg than a Jetta TDI? Off hand, I don't think that's possible. I could be wrong, but I just don't think so.

texases

That's exactly what Motor Trend found. Those are 4 gas powered cars compared to the TDI.
Here's the article.

And if you compare the Jetta TDI to the Cruze Eco on fueleconomy.gov you'll find they're very close, slight edge to the TDI (an mpg or two out of 40 or so.)

Add in the higher cost for diesel vs. RUG, and the higher vehicle cost, and the Cruze Eco is quite a bit cheaper, I'd bet.

Edmunds TCO has the Cruze about $2600 cheaper over 5 years, $200 of that being lower fuel cost.

gagrice

Notice most people wanted to own the VW TDI. The $2000 premium is meaningless as we have proven time and again it is given back at trade-in time.

An even better indicator of mileage is Fuelly.com. There the 2013 Cruze represented by 99 owners averaged a respectable 33.2MPG. The 2013 VW Jetta TDI with 335 owners reporting averaged 38 MPG.

The best part is getting away from the awful gas in CA.

I think for VW to gain significantly in the US market they need to bring their real high mileage vehicles. How many would opt for 70 MPG in a Yaris sized car?

Mr_Shiftright

Americans don't like "dinky" cars and they don't like "stripped down" basic ones either.

gagrice

I thought the Yaris, Fiesta and Fit were all good sellers. Would be nice if they used about half as much gas. The VW Polo TDI is in the same size group and gets about 70 MPG on the road.

ohenryx

Americans don't like "dinky" cars and they don't like "stripped down" basic ones either.

True. I don't think anyone likes a "dinky" car, but people's opinion of what constitutes a "dinky car" will vary quite a bit.

"Stripped down" -- maybe, maybe not. The original Volkswagen Beetle was truly stripped down basic transportation, but it has a cult following even to this day. The Geo Metro achieved somewhat of the same status, although not as wide spread nor as long lasting. And then there's the Jeep ...

fho2008

"?? All diesels are turbos"

Really? I can name a few that aren't turbocharged.

gagrice

Speaking of Dinky cars. How about your Mini Cooper. Now that is dinky. Makes some of the small cars in the EU seem large. I think if our dueling air quality people would get their acts together and match the EU standards we would get a flood of diesel choices here. Skoda has a nice lineup that would help push VW to the top.

texases

"I can name a few that aren't turbocharged"

Please do, in use in cars today. Of course decades ago there were non-turbos. No more.

fho2008

You are the one that said all diesels are turbos.

In use today, GM 6.2 6.5. Ever hear of Cummins, Cat, Ford, or International?

I can go on if you want.

texases

Those aren't cars, and they aren't in production today. Current pickups with diesels are turbos.

I'm sorry, I just fell in a 'troll trap'...well done!

Mr_Shiftright

You couldn't get a person in 2013 to buy a "new" 1965 VW Bug or Geo Metro at gunpoint.

Probably in the "real world" that Golf TDI will deliver maybe...55-58 mpg, which ain't bad, but it's a small engine and probably has 0-60 in about 11 seconds or so.

(that 70 mpg is on the European test cycle, and it's known to drop 20% by the time it gets translated to the EPA estimates).

gagrice

I would imagine the Golf GTD will have more people wanting them. There you get to have your cake (performance) and eat it too (high mileage).

Any date they will hit the VW showrooms? Hopefully the rest of the German automakers will follow Mercedes and offer the popular CUVs with diesel. VW needs to add the Tiguan TDI to their line up. They do have a ways to go to reach their US sales goals.

Mr_Shiftright

yeah the GTD is more like it for American tastes. "Only" 40 mpg but lots more power.

It's a bit pricey, though--more in Mini Cooper territory than Yaris territory, that's for sure.

hpmctorque

Fiesta, Yaris, Nissan Note, Mazda 2 are all good examples of modern basic transportation. Basic today usually includes power windows, PS, A/C, safety equipment, power door locks, adequate power, decent interior lighting and more, so basic no longer equates with stripped.

I recently bought a new Fiat 500 with manual as a third car. Have driven it 3,500 miles, and love it. Tony hasn't had a chance to fix it again, yet.