The implication has always been that if (company insiders insist the proper qualifier should be when) Volkswagen becomes the world's most prolific manufacturer of automobiles it would come at the expense of Toyota, the world's largest automaker since 2007. Ruthless Teutonic efficiency and an aggressive merger/acquisitions program would triumph over Japan's creeping world domination.
No mention has been made of General Motors -- North America's auto manufacturing sector has been in such steady decline that its reign as the leader in all things automotive was seemingly gone forever. That was to be the order of things, then--Europe ascending, Japan holding ground and America fading.
Oh, my, isn't it amazing what one great recession, a couple of bankruptcies and the mother of all safety recalls can do to the best-laid plans of companies? Although there's no foretelling whether Volkswagen will actually become the world's largest automaker in the distant future, it's looking more and more likely that General Motors -- yes, the recently bankrupt GM -- might regain the No. 1 perch in the interim.
Worldwide sales for the once-wounded giant were up an astounding 12% in 2010, with total sales ringing in at 8.29 million units. That was a piffling -- unless you're Saab, in which case it's almost a year's worldwide production --29,000 units behind Toyota, the company that, just three years ago, steamrolled past the General on a seemingly unstoppable path to world domination.
Since then, however, the nasty "unintended acceleration" debacle took the wind out of Toyota's sales just as, after 25 years of heading straight into the dumpster, the good ship General Motors was finally righted by U.S. President Barack Obama -- and not a moment too soon.
Where critics once espoused that General Motors' reputation was so tarnished nothing could bring back consumers, North American sales are now going gangbusters. Sales in China are up even more; a 29% increase now sees the General selling more cars in the world's most populated nation than in the United States.
No longer saddled with mountains of debt (let's hear it for the fast-forward version of Chapter 11), GM is once again profitably building small cars -- its Chevy Volt is the darling of the tree-hugging set and, will wonders never cease, even Buick's moribund reputation has been rejuvenated.
So the battle for world domination -- at least the four-wheeled kind -- is now a three-way race. However, the real question seems not to be which company will win it but why anyone would want the title. The last 25 years of GM's reign atop the auto world was fraught with the worst of corporate lassitude -- ambivalence, indifference and rot. Toyota's reign has been nothing short of abject misery, with one disaster followed by another. Indeed, heavy seems to be the head who wears the crown. While GM and Toyota used to talk incessantly -- if only to deny they were striving mightily (GM to retain, Toyota to usurp) -- about being the No. 1 automaker in the world, both are remaining astonishingly tight-lipped about any further competition for the crown. Only Volkswagen -- brash and possibly a touch naive -- is making known its intention for the top spot--by 2018 no less.
And what of its chances? Not half-bad if its current momentum can hold. The company's core brand, Volkswagen, has a new mission --retain its European flair but couple it with Japanese-like pricing. Audi, the company's flagship luxury marque, can do no wrong. And now that VW Group has added Porsche to its stable that already includes Lamborghini, Bentley and Bugatti, it looks to have something of a stranglehold on the upper stratum of the sports car market. Around the world -- China, Brazil, Russia, etc.--Volkswagen is steaming ahead, generating impressive profits (5.6%; an incredible number in the wake of the recession) and increasing sales by leaps and bounds.
A few roadblocks do appear on the horizon, however. Much of Volkswagen's production still emanates from Germany where production costs -- thanks to powerful unions -- remain very high. Sales in North America, meanwhile, are comparatively soft. The company's new pricing strategy will no doubt improve things, but sales must double here in the next six years for the grand stratagem to unfold according to plan.
But perhaps the company's greatest weakness is the proliferation of brands. It just acquired a portion of Suzuki, bringing the grand total to 10 nameplates under its belt. Managing such a disparate group is a challenge under the best of circumstances. When some of the cousins can't sit at the same table -- Porsche, for instance, is not happy at being under VW's thumb and Audi has periodically bridled at Volkswagen's control -- it's made all that much more difficult.
For now, the entire group pretends to be harmonious, primarily because that's what Ferdinand Piech, Volkswagen's autocratic chairman, wants. And, as former Porsche CEO Wendelin Wiedeking can attest, what Piech wants Piech gets. Exactly what will happen -- an orderly changing of the guard or internecine warfare -- when the 73-year-old leader departs the scene might have a bearing on whether Volkswagen can reach the No. 1 spot -- and, more importantly, whether it can remain there.
dbooth@nationalpost.com
