Market Insight: Volkswagen’s world title fight

AMBITIOUS Volkswagen Group may steal the mantle as the world’s top-selling car-maker as early as this year – some seven years ahead of schedule.

While General Motors and Toyota have been duking it out at the head of the global sales tables for years, third-placed Volkswagen has been inexorably closing the gap – now more rapidly than expected – and is on the verge of taking the lead as the 2011 finishing post looms into sight.

VW has winners in every corner of its global stable – which includes Audi, Skoda, Seat, Porsche, Bentley, Bugatti and Lamborghini – and is riding towards the winner’s circle on the back of booming sales in North America and central/eastern Europe as well as the emerging markets of China and India.

The German giant is poised to post a total of 8.1 million sales this year, an increase of some 13 per cent on last year’s 7.14 million total for the group.

Toyota narrowly won the 2010 global sales race with 8.42 million vehicle sales but has been slapped back onto its haunches this year by massive production losses due to the Japanese earthquake and tsunami in March.

It is also now contending with production cutbacks due to the severe floods in Thailand.

And even though General Motors, which sold only 28,000 fewer vehicles than Toyota last year according to its own figures, is increasing market share in some of its major markets and could therefore even improve on its total by the end of 2011, it may not be enough to hold back rampaging VW.

From top: Skoda Yeti, Seat Cupra Cup, Audi A6, Bentley Continental GT, Porsche 911.

It may even come down to what figures are used to make the final judgment at the end of the year as the figures released by the companies themselves have in the past differed significantly from those quoted by industry analyst JD Power & Associates and even the supposed official peak body, the International Organization of Motor Vehicle Manufacturers (OICA).

A Bloomberg report this week almost conceded the sales title to VW based on a survey of three industry analysts.

According to Bloomberg, Volkswagen will win the 2011 sales race with 8.1 million vehicles from GM on 7.55 million and Toyota on 7.27 million. But one of its analysts, PwC Autofacts, sets VW’s figure as high as 8.6 million while another, JD Power, puts VW’s ‘winning’ total at only 7.8 million.

General Motors has not yet released its global sales figures to the end of September, but with sales up in the United States, China, India and even Europe, the US auto giant will not go down without a fight. Having sold 8.4 million vehicles last year, GM will set a hard target for VW.

Volkswagen itself, reporting sales of 6.11 million (excluding Scania trucks) for the first nine months of the year – a rise of 13.9 per cent on the same period last year – said it is on track to exceed eight million for the full year.

“We are very pleased with the development of the Group,” said VW Group board member for sales Christian Klingler. “Delivering six million vehicles in nine months represents a key milestone on the way to reaching our annual target of eight million vehicles sold in 2011.

“We are also expecting very good delivery figures for the fourth quarter. We continue to keep a close eye on developments in global automobile markets, some of which are highly volatile.” Only three years ago, VW chief executive Martin Winterkorn put the company’s ambitions clearly on the table, pledging to overtake Toyota and became the global leader by 2018. That gave him 10 years to achieve a mighty goal, breaking an American and then Japanese domination of the global car market, but he may soon be able to claim victory in just three years.

Announcing its third-quarter results, VW said it sold 2.77 million vehicles to the end of September in Europe, an increase of 10.8 per cent, including 390,000 in central and eastern Europe (up 28.3 per cent). VW’s home of Germany, the strongest individual market in Europe, remains strong for the brand, rising 12.3 per cent to 864,400 units while the rest of Western Europe rose only 6.3 per cent to 1.52 million.

The increase in China, the world’s largest vehicle market, was a relatively modest 14.6 per cent to 1.69 million units while North America rose strongly to 485,400 (up 21.4 per cent) and South America reached 700,900 (up 9.5 per cent).

In terms of brands, Volkswagen accounted for 3.81 million year-to-date (up 12.3 per cent), Audi delivered 973,200 vehicles (up 17.4 per cent), Czech auto-maker Skoda sold 266,800 (up 16.8 per cent), Spanish brand Seat recorded 258,900 sales (up 3.1 per cent) and Porsche delivered 90,972 cars (up 30.9 per cent).

If Volkswagen does succeed in claiming the world crown this year, its celebrations may be restrained because most analysts expect Toyota in particular to bounce back strongly in 2012 and reclaim the title. But it will still be a mighty accomplishment for the folk from Wolfsburg.