GuruFocus Premium Membership

Serving Intelligent Investors since 2004. Only 96 cents a day.

Free Trial

Free 7-day Trial
All Articles and Columns »

Volkswagen Prepares to Unseat Toyota

March 15, 2014 | About:
Live investor

Live Investor

3 followers

The world’s third largest automaker Volkswagen (VLKAY) might touch mammoth sales number in 2014 as the automaker plans to overtake bigger rival Toyota (TM) as early as possible. The company expects to sell more than 10 million vehicles in the current year as it has solid strategic plans to unveil new models in the global market which would boost its sales volume.

What do numbers speak?

Volkswagen sold 9.73 million vehicles in 2013 and overtook General Motors (GM) to become the second largest global automaker. The European biggie is now preparing to unseat Toyota and hold the top position as the world’s lead auto giant.

But one thing that stood out in the 2013 company results were its Porsche’s incredible contribution in the company’s profits. Although the company sold just 155,000 units of this luxury brand, it registered a staggering €2.6 billion in operating profit. If we see the stats, we would know that Porsche accounted for less than 2% of Volkswagen’s sales volume, but contributed more than 22% of the company’s operating revenues.

The German carmaker’s group sales have increased 4.7% to 1.47 million vehicles in the first two months of this year. These numbers have not been adjusted for the company’s MAN SE and Scania heavy-trucks brands.

Inching closer towards the goal

Volkswagen has set an ambitious target of becoming the largest automaker by 2018 and hence has some heavy investment plans of pouring in around $117 billion in the next few years. The company said that it has scheduled the launch of some 100 models through 2015. Volkswagen is not only the top automaker in Europe, but it’s dominating in China as well.

The Asian country is a hot market with tremendous potential for growth. Several automakers are pooling in their resources to make the most of the largest auto market. The other dominant player in the mainland is General Motors. China continues to be a strong market as the emerging economy is seeing healthy demand for cars even as the country has slowed down.

The good news for Volkswagen is that the European auto market is gradually seeing better days after six sluggish years, and since the company has a strong presence in its home market it would benefit from the recovering economy.

While these markets are looking good, Volkswagen is working hard to bolster its U.S. sales where the automaker has lagged behind peers. It is imperative for the carmaker to increase its focus in the U.S. market, where Detroit automakers including General Motors and Ford (F) stand as the biggest deterrent. Since the U.S. market is on a rebound, it has a lot to offer to the automakers particularly as the nation has a soft spot for cars. So Volkswagen could largely benefit if it can make the right offerings that suits the U.S. taste and overshadow rival models.

To conclude

The overall market scenario appears favorable for the industry giant. Volkswagen looks poised to see further growth as demand for both passenger and luxury cars is rising. It luxury brands Audi, Bentley, Lamborghini, Porsche are the most coveted. With several new models in the pipeline, Volkswagen looks prepared to finish the race first.


Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide