Friday, August 15, 2014

Could VW Be In Trouble?

Alexander Carabitses

Volkswagen Group is on the quest to be the world's largest automaker by 2018.  This German car company, controlled by the Piech family, consists of twelve brands:

(Image credited to Volkswagen Group)

Now when you look at how many brands this company has, its easy to assume becoming the world's largest car company will be easy.  But currently the Volkswagen brand is hurting in one of the world's two biggest markets, and I'll give you a hint: it isn't China.

Thats right, Volkswagen is struggling in North America.  The U.S. specific Passat isn't selling well, and the new Golf and GTI are the first new VW products to go on sale in this country since the Beetle Convertible in early 2013.  Now the new E-Golf, Golf R, and Golf Sportwagen will all be going on sale soon.  These will eventually be followed by a production version of the Cross Blue SUV Concept, to be built at the VW plant in Chattanooga, Tennessee.  The next CC, and possibly even the next Tiguan will be built there.  And do not forget the next Phaeton, also coming soon.  So Volkswagen does have new product up its sleeve, no question.  But its sales are so low, it's ridiculous.  Should Volkswagen consider entering more segments in the U.S.?  Possibly, but its already in the midsize sedan and compact CUV segments (i.e. the most profitable segments in the mainstream car market), and is struggling there too.  Still, it wouldn't be a surprise to see the next Polo, Scirocco, and Amarok pickup to go on sale in the U.S. in their future generations. 

Clearly Volkswagen has catching up to do in North America, as it was the only car company in the U.S. to loose market share last year.  But the problems could be worse than that.  Experts are saying that while its impressive how VW manages all of their brands, they may not be able to sustain them in the future.  Thats because Ferdinand Piech, Chairman of the super advisory board, will leave the company in the next few years.  According to these industry experts, he's the only person who can manage all twelve brands so efficiently.  In other words when he leaves, chaos could occur within the VW Group.  Volkswagen's chances of being the worlds largest auto maker are starting to seem a lot less likely.  Have a good weekend!

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