VW may have passed Toyota (NYSE: TM) as the world's No.1 car company just as Toyota passed GM (NYSE: GM) a year ago. Unfortunately, the companies all operate in an industry where being on the top of the pile does not matter much these days. It is probable that each of these firms loses money on the great majority of the cars they sell. To make matter worse, market share may be a weakness as the auto industry moves out of the recession.
It seems more and more likely that modest sized and nimble auto makers like BMW and Hyundai, who do not have to maintain factories in distant corners of the world and do not have to develop and market dozens of individual products, may hold an advantage in a fragmented car industry. The behemoths rely on their ability to maintain massive capital spending and their cost structures can do them nearly irreparable harm in a weak economy.
According to Reuters, "Volkswagen AG may have passed Toyota Motor Corp as the world's top selling automaker in the first quarter, helped by robust demand in its main markets, while its Japanese rival suffered sharp declines."
The US market is a part of the trap that VW could fall into. While chasing Toyota and GM, it cannot ultimately stay in first place without having a dominant position in the American market. It has turned out that spending huge sums to gain market share in US has been an Achilles heel for both Toyota and GM. Each has made money in the US, but the losses that may accumulate during the recession will be tremendous. If each had focused more on the profitable end of the market and decided it would not maintain a large number of brands, they would probably have been better off.
VW may have gotten what it hoped for, but the price will be higher than it expected.
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Reader Comments (Page 3 of 3)
4-19-2009 @ 10:52AM
tugger43221 said...
I have owned 4 Volkswagens, all purchased new. My last Jetta was a total lemon. 3 Dashboards, 2 passenger seats, 3 CD players, all new window controls, it was one thing after the other. The first summer I had it I was in a dealership loaner more than my own car. Volkswagen, as well as the dealer, would do nothing about the situation other than repeatedly apply new parts until they too failed. I have not owned the car for several years and still receive recall information. Hopefully it is by now in the Volkswagen junk yard and not someone elses problem. I now drive a Volvo and could not be happier.
4-19-2009 @ 11:58AM
Sarah said...
Dude, here's my problem. I agonized and researched vehicles for months trying to keep from being ripped off. I just wanted a small reliable suv. Honda is a horrible rip-off, you just pay for the name. The Toyota Rav4 (at the time) had issues with rolling due to the higher center of gravity. Blazers had serious safety issues, and the Jimmy's did too. The Santa Fe was ugly and my mother knew two people who had their transmissions burn out on them. I ended up putting a big down payment on a Chevy Equinox. Big mistake. They have great crash test ratings but the engines are junk. My father bought an extended warranty - you see he bought it before the five year new warranty came out. Not three months after my warranty expired I had engine damage that was $1,100. I don't think that's a coincidence either. I kept that thing clean and very well maintained. I never missed an appointment even to get the tires rotated and I checked the fluids monthly. I'm a woman but I know my basic car maintenance. If I didn't have the warranty I'd be paying for a piece of crap I can't drive. This is the fifth year I've had it, then I had to get the entire radio/cd player replaced because it 'could not be repaired'. The cost, including labor was over $500. I got into it at the dealership where I took it only to have them try to charge me more! I'm a woman and expect mechanics to rip me off. Even the guy I spoke to at the extended warranty company told me not to pay! My deductable was $100 and they thought I'd fork over $172.60 because the DEALERSHIP is a scumbag haven. You don't call a company, agree upon an estimate to do a repair and THEN call back saying you need more money for labor. I told them no and that it was their fault for undercharging. In no way was I responsible for their bad estimate and my warranty company refused to pay. They had to eat the $72.60.
I often wonder if the repair shops and the auto makers do this on purpose just to rip people off as much money as possible. I wasn't going for anything flashy and overpriced like the Murano or the Toureg, but for crying out loud I don't think it's too much to ask for an ENGINE to last! I won't buy another vehicle until I can pay for it outright. I don't want to deal with more crappy warranties and fraudulent dealership repair shops. However, I have no idea if there is such a thing anymore as a reliable and affordable vehicle. I also have an old muscle car back home and it fires up EVERY time I turn the key. I've never had a problem with it once and that car was made in 1976! I was born in 1982. Can anyone tell me why a car that is OLDER than I am is actually more reliable than my newer suv?! I perform routine maintenance on it as well and I'd love to know why an old muscle car is better than new suv with all of our wonderful technology of today? It doesn't add up does it? During that gas crisis my parents laughed when they heard that cars that got better gas mileage would be made. They were right. My mom's 1996 Suburban gets better gas mileage (both city and highway) than the new ones sitting on the lots. Her suv was also cheaper and didn't have all the ridiculous bells and whistles that can break and bring the price tag up. $40,000 for a suburban? I don't need three small tvs, seat warmers, tire gauges, etc for that price. I don't want it either.
4-19-2009 @ 12:23PM
ladywiccan47 said...
how can you say the end of unionism in the U.S.? It's alive and well in auto making and sucking the life out of the workers
4-19-2009 @ 12:46PM
Tim said...
I love it when people argue about stupid crap that doesn't even matter.....LMAO
4-19-2009 @ 7:20PM
Randy said...
mcusa226-It's morons like you that have the country in the shape it is!
4-19-2009 @ 1:38PM
SteveoReno said...
Face it, the Americans couldn't make a decent camera either! Besides polaroid, I don't know if you would call that a decent camera and their not in business
anymore either.
4-19-2009 @ 1:56PM
wongtpa said...
Buy American!
4-20-2009 @ 8:47AM
Rickey J Thompson said...
I see we have the cry babies out today.