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However, the Golf VII’s arrival is significant not only because it’s a huge seller (particularly in Europe) but because it also marks the first use of VW’s new MQB (Modularen Querbaukasten or Modular Transverse Matrix) vehicle architecture, which can be adapted for a huge range of different vehicles, from small sub compacts like the Polo, to large family sedans such as the Passat.
In addition, MQB was also conceived to be manufactured at different facilities world wide and even adapted for different brand vehicles within the VW group, such as Audi, Seat and Skoda. All of these different companies will utilize the same production equipment that can accommodate cars of not only different lengths and wheelbases but also tread as well. Up to 60 different models will appear on the MQB platform.
One of the prominent features offered by the MQB platform is the uniformly mounted engine in all cars built on the MQB. This will allow the Volkswagen group to have different cars rolling off of the same production line back to back.
The idea is that potentially, huge cost savings will be realized, as will higher volumes, particularly important since VW seems intent on pushing both General Motors and Toyota aside for the undisputed title of the world’s largest automaker.
Along with the Saab saga, the story of VW‘s attempt to buy Porsche AG has been nothing short of a soap opera, with twists and turns at every juncture. After previous attempts by the Wolfsburg automaker to purchase the remaining shares in the smaller Stuttgart concern fell through, it now appears, the deal may be on again.
Both automakers have talked about consolidation for years, yet when former Porsche CEO Dr. Wendelin Wiedeking’s attempt to buy a larger stake in VW fell through, the tables turned; thanks to German law that required Volkswagen to buy shares in Porsche instead.
However, despite VW currently owning more than 49 percent of Porsche and the two companies sharing an upper management structure, there’s still little in the way of cohesiveness when it comes to operations, each firm doing its own thing when it relates to aspects such as R&D, engineering, manufacturing and sales and marketing. This is something that’s proving particularly troublesome, especially for strategic projects, such as upcoming EV vehicles and new lightweight sports cars.
Now, it appears that greater integration between the two companies might finally become a reality this year, information leaked by sources at VW suggest that Porsche has put in an option to sell its remaining 50.1 percent of shares this November.
If that does come to pass, Volkswagen could purchase Porsche outright by the end of the year, however German tax complexities mean that if an outright purchase were to take place before VW can exercise its own call option on the remaining shares (which would be March at the earliest) the merger would be subjected to higher taxation, not something that either company wants.
Martin Winterkorn, CEO of Volkswagen and Porsche, is clearly frustrated at the present lack of integration between the two companies, something he reiterated earlier this month at the North American International Auto Show in Detroit.
“We want to cooperate with Porsche in such a way that as many synergies can be leveraged as soon as possible,” he said, “without needing to have a lawyer stand next to a Porsche employee every time he screws something into a Volkswagen or vice-versa.”
It’s quite impressive when you think about it; VW’s China operations have grown to such an extent (sales of some 1.9 million cars annually) that the company now needs to add a 10th manufacturing facility in the country to keep up with demand.
Little is known about the new assembly facility at this time, only that it will be built in or close to Urumqi, the capital city of Xingjiang province (the largest metropolis in Western China) and will be tasked with assembling two mid-size sedan models for Chinese consumption.
VW currently has two joint venture partners in China, First Automobile Works (FAW) with which it’s had a deal for more than two decades and Shanghai Automotive Industry Corporation (SAIC, shown above). Volkswagen didn’t make clear which partner would be involved with this venture.
Nonetheless, once the new factory is up and running, it should enable Volkswagen to boost vehicle sales to over 2 million cars annually in China.
If sales continue to grow steadily in emerging markets, then it looks very likely that by the end of this year, Volkswagen AG will overtake Toyota as the world’s biggest volume producer of automobiles.
VW’s sales, which ranked third in 2010 are expected to rise by some 13 percent this year, resulting in a total of 8.1 million vehicles finding owners across the globe, according to projections from three different auto analysts, surveyed by Bloomberg.
The surge is expected to come primarily from China, where gains are expected to be around 20 percent for VW and also India, where the automaker’s volume is forecast to more than double.
According to Jenny Gu, a senior market analyst for J.D. Power & Associates, based in Shanghai, “Emerging markets are at a stage of car-adoption by consumers and there is still a large space for sales to grow. VW realized this and put a lot of effort on emerging markets.”
Toyota, by contrast, is still struggling in the wake of the March 11 natural disaster in Japan. In addition, the company also had to suspend operations in Thailand recently due to heavy floods, though analysts at IHS Automotive believe that Toyota has every chance of recovering and nudging VW out of the lead as the largest vehicle producer next year, provided its recovery remains on track. Current estimates from IHS peg Toyota selling some 8.4 million vehicles next year, about 500,000 more than Volkswagen.
Whether that happens or not, one thing’s certain; emerging markets are seen as key to growth in the automotive sector, as sales in developed countries slow. Volkswagen plans to invest a record 62.4 billion Euros (approximately $87 billion US) next year, plus another 14 billion Euros on its joint venture operations in China.
VW was the first western automaker to set up shop in China and has been selling cars there for around three decades. And it looks like its goal of becoming and remaining the world’s biggest automaker in terms of volume is likely to bear fruit, for in addition to VW products, it’s also seen demand for its Audi brand vehicles grow significantly.
In terms of global sales, Audi nudged past Mercedes-Benz this year to become the second volume seller of premium branded cars and SUVs in the world, behind BMW. In addition, Audi plans to build another factory in China in order to cope with growing demand – sales in that country are projected to reach some 700,000 units annually by 2015, according to Dietmar Voggenreiter, head of Audi’s Chinese operations.
However potential obstacles to achieving number one status still loom on the horizon. The ongoing dispute between VW and Suzuki over their intended alliance is likely to cause possible road blocks, especially in India where Maruti-Suzuki is by far the most dominant player in the automotive market, as is the situation at home between VW and Porsche AG, where a planned merger is experiencing significant delays.
[Source: Automotive News]
However, despite claiming numerous cases of contract infringement, during a press statement, Suzuki failed to highlight exactly what those specific breaches were.
The origins of the quarrel between the two automakers date back to 2009, when VW acquired a 19.9 percent stake in Suzuki, while the Suzuki purchased a 1.49 percent share in the German giant.
Sukuki’s fiery chairman, Osaku Suzuki, has maintained all along, that from his company’s standpoint, the alliance was meant to facilitate Suzuki’s access to VW technologies, though in a recent press statement he said, “I remain disappointed that we have not received what we were promised. If VW will not allow access, it must return Suzuki’s shares.”
VW on the other hand, claims Suzuki also violated terms of the contract by failing to disclose that it had done a deal with FIAT to supply engines, yet Suzuki maintains that this allegation “significantly disparaged Suzuki’s honor” and continues to seek an apology and retraction from the Wolfsburg company.
With both parties at loggerheads, it seems that they will each have to resort to legality processes, in order to have any chance of resolving the situation, though given how hostile said situation has become, it is very unlikely either company will be interested in salvaging what’s left of the alliance.
According to an IHS Automotive industry analyst in Tokyo, Masatoshi Nishimoto, ”if the partnership with VW is delaying [Suzuki's] development of new technology and cars, they need to end it as soon as and as calmly as possible.”
Volkswagen sold a whopping two million vehicles around the globe in one quarter, the first time in the company’s history.
The criticism of the new Jetta didn’t damper sales at all—sales profits grew over 30% in the first quarter, netting VW a tidy 37.5 billion Euros. Growth in China, India, and Eastern Europe helped fuel the profits, and the Polo, Tiguan, and Jetta were the models most gobbled up by international consumers.
“The Volkswagen Group has got off to a good start”, said VW chief financial officer Hans Dieter Pötsch, adding: ”Our sound finances and continuous improvements in profitability are the basis for the Volkswagen Group’s successful future.”
Good news for the economy, not-so-great news for BMW and Mercedes-Benz factory workers who had travel plans over the holiday season. In order to meet the growing demand for new models, these two automakers have decided to shorten Christmas breaks this year.
This shortened vacation policy applies to BMW’s German plants in Dingolfing and Leipzig, as well as Mercedes-Benz’ Hamburg factory. The BMW factory is where the recently overhauled 5-Series and the X1 are made, and the Mercedes plant supplies parts to vehicles including the Mercedes E- and S-Class sedans.
While workers might be grumbling about there shortened holidays, this is great news for the automakers and the economy. It shows that luxury-vehicle demand is back – in fact, BMW and Mercedes each target sales growth of more than 10 percent this year. Business is also booming for Audi as well (the luxury unit of Volkswagen AG), as they have plans to add shifts next month to address a record number of orders.
As for sales, BMW increased sales worldwide by 13 percent to 1.19 million vehicles through October (this includes Mini and Rolls-Royce models, which the company manufactures), while deliveries of Mercedes and the Smart city car rose 12 percent to 1.04 million.
It’s nice to get some good news about the economy for a change, and the experts remain optimistic as well. “This is the first strong signal that the boom over the last few months can continue into next year,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler.
[Source: Automotive News]