Volkswagen Vying To Be World’s Top Automaker By 2018

By Viknesh Vijayenthiran

Viknesh Vijayenthiran

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Vik is an Editor at High Gear Media and contributor for a number of sites within the High Gear Media network. He was a co-founder of Motor Authority... More

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2010 Volkswagen New Compact Coupe Concept (2011 Volkswagen Jetta Coupe)

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The Volkswagen Group has given itself eight years to catch up with Toyota in terms of productivity and profit as part of CEO Martin Winterkorn’s pledge to close the gap in performance between the two automakers, reaffirming plans originally formulated back in 2007.

The promise to move from third position (behind General Motors and Toyota) into the top spot by 2018 was made by the German auto giant’s management board today, which wants to see sales increase by nearly 60 percent and profit margins improve as well.

Last year Volkswagen Group sales grew by 1.1 percent over the previous year to 6.3 million vehicles across its ten brands, which includes Porsche, Audi, Bugatti, Bentley, Lamborghini, Skoda, and Seat, as well as a couple of commercial vehicle divisions and Volkswagen itself. By comparison, world number one automaker Toyota saw its sales fall 13 percent to 7.81 million vehicles and with the latest unintended acceleration fiasco the once unassailable Japanese automaker could be destined for another major hit.

One advantage Toyota has over the Volkswagen Group is its strong presence in the U.S., where most of the Volkswagen Group brands are still regarded as small players. Strategies in place to overcome this issue are to ramp up production in the U.S. at the automaker’s new plant in Tennessee, and to take advantage of parts sharing and extending the life-cycle of components.

Other goals in place are to boost operating margins by at least 5 percent in its core automotive business and a group pretax margin over 8 percent. The Volkswagen Group’s profit margin stood at just 1.6 percent in the first nine months of 2009.

[Automotive News, sub req’d]