VW to Become World’s Largest Automaker This Year?



This is a guest post by Tony from Car Throttle – your performance car experts!

A recent report was published by R.L Polk Germany that speculated on Volkswagen AG’s overtaking of General Motors as the world’s second largest manufacturer this year. As you know, GM lost its Number 1 position to Toyota last year. Not only will GM fail to settle into position of No.2, maybe Toyota will be knocked back to No. 2 once again. No, not by GM…but by Volkswagen.

Now I’ve truly seen it all. It seems like the top 3 automaker spots will turn out to be pretty volatile over the next few months and maybe even years.

VW Golf Side

Sources are speculating that Volkswagen may have already overtaken Toyota in first quarter sales results, thanks in part to the government’s “Cash for Clunkers” incentives that have fuelled growth in VW’s largest markets. Whilst overall the VW Group is posting an 11 percent sales declines, that is far less than declines being posted by other automakers, and that has resulted in large market share increases for the company.

Volkswagen is doing well in its home market of Germany, increasing sales there, as well as in emerging markets like Brazil. There have been some incredible successes in places like Russia too, where in an overall market decline of 39 percent; VW has managed to book volume growth of 14 percent.

Latest estimates for Toyota conclude that their first quarter sales could be down by as much as 47 percent, a startling decline. Markets where the company has done well have been hard hit, taking for instance dramatic declines in the United States, where VW has had less of a presence. The shocking declines in volumes are a reason for the company’s dire profit and revenue losses. Toyota will hit a full-year loss for 2009, a dramatic change for a company that just a year ago was seemingly unstoppable.

VW Polo Rear Side

VW has also moved up to Number 2 in market capitalization in recent months, coming at $100 billion, just behind Toyota. VW may overtake Toyota in that measure as well, as Toyota’s stocks have been on the decline. Porsche buying and a stream of positive news have contributed to VW’s gains and at one point, VW was the world’s most valuable company, even ahead of Exxon Mobil.

No doubt, VW is on a roll! A string of product hits and wise management has helped the company (which includes all of its volume brands Audi, Skoda and Seat) be positioned to come out of this downturn a stronger, better positioned company. That is a remarkable thing.

Guess Porsche knew what they were doing after all; its investments are (way) up and the company it has bought is performing very well. It probably has something to do with Porsche’s management smarts as well.

I admit to being wrong here as well. When it was announced, I thought VW’s goal of World’s Largest was a longshot, even way out in 2018 (which was the original goal). I mean VW sold 6.3 million vehicles to Toyota’s 9 million in 2008. That’s a big gap! The recession and VW’s product mixed have worked to their advantage in the sales race though.

It looks like Volkswagen might meet their goal 9 years early. Even if they don’t pull out the whole year as the World’s Largest, the fact that the race is even close is an amazing thing. Analysts expect it to be neck and neck all year, similar to the race between Toyota and GM before Toyota pulled away finally last year. In any case, VW has given a whole new meaning to the phrase “beating expectations”.