Volkswagen wants to conquer the automotive world no later than 2018. We’ll see about that.
But a visit to the Volkswagen Group’s sprawling, massive, immense headquarters in Wolfsburg suggests a colossal car company, one feverishly at work. This is a multi-brand monster of a conglomerate that is not to be underestimated.
Consider: some 38 million new vehicles have been built in this company town. Nearly 50,000 people toil here for Europe’s largest car maker – although “toil” is probably an exaggeration, actually, given this is Germany where workers are treated quite well. About 23,000 are directly involved in building cars like the Golf, Golf Plus, Touran and Tiguan, all produced right here.
Every day 2,800 new VWs spit off the assembly lines here. That’s slightly more than 10 per cent of all the vehicles VW builds every day in 61 plants around the world. VW is so important here, well, the regional government of Lower Saxony owns a stake substantial enough to give it essentially veto power on the VW supervisory board.
If you’re like most consumers when you think of VW you think the Beetle or the Golf, two small cars that represent VW’s post-war past and its 21st century future. But you should also think Audi A4, Bentley Mulsanne, Bugatti Veyron, Lamborghini Murcielago …
You see, brands such as Audi, Bentley, Bugatti and Lamborghini, along with Scania, SEAT, Skoda and VW Commercial Vehicles, all belong to the same group – and VW has a controlling interest in Porsche and a large stake in Suzuki, though the Japanese auto company recently said it wants an unconditional divorce from its German partner.
So the VW Group is a force, though a laggard and an underperformer in North America. Take Canada. The VW brand has just 3.3 per cent market share here, even though sales on the year are up 18.7 per cent – largely on the success of the Jetta sedan, which is a solid top-10 sales performer in 2011.
“The VW Jetta has more than doubled sales month in and month out and is a very good example of what a diesel option can do for sales in the Canadian market,” says auto analyst Dennis DesRosiers of DesRosiers Automotive Consultants.
Audi, meanwhile, has increased market share to 1.1 per cent, with sales up 16.6 per cent on the year. Audi, VW’s volume premium brand, is growing as fast as possible without straining its dealers’ ability to sell and service new customers, says Audi Canada president Martin Sander.
Growth is a real problem for the VW Group in Canada – growth as in potentially too much, too fast. Sander makes no bones about it. It’s that crazy growth that made me curious enough about VW to go to the source – to visit company headquarters in Wolfsburg. You see, I have always believed that car buyers don’t just purchase a car, they look to own a vehicle from a car company that stands for something.
Toyota and Honda owners have for at least two decades bought into these brands because they were considered sensible, reliable, affordable and safe. If you bought a Honda Civic or a Toyota Camry you did not need to explain why to the neighbours. Other brands say other things about their owners’ priorities and values.
But VW? Until very recently, VW was a quirky, niche brand in Canada, despite the group’s far-reaching global footprint. If you wanted an affordable diesel-powered car, you bought a VW. If you wanted a New Beetle, it was a Volkswagen. If you wanted an undersized and, quite honestly overpriced, mid-size car with a European flavour, that was a Passat – and VW in Canada sold very few of them. In a nutshell, the VW brand in Canada did not have a winning strategy for the mass market.
That is now changing and tangible evidence of that shift is found in the hot-selling Jetta. Last year, VW launched a bigger, cheaper and less sophisticated version of this compact sedan that had critics like me spitting out criticisms. The Jetta had been cheapened and was among the worst performers among all compact cars, said Consumer Reports and many others. And yet real Canadians, the ones writing cheques, have made this Jetta a sales champ.
This fall, VW Canada is launching a reinvented version of the Passat mid-size sedan and like the 2011 Jetta, the 2012 Passat has been redesigned with Canadian and American buyers in mind. The car is bigger, less expensive, and built in Chattanooga, Tenn. If this North American Passat does for VW Canada’s mid-size sales what the Jetta has been doing in the compact segment, well, look out Camry, Honda Accord, Ford Fusion and Chevrolet Malibu.
And Wolfsburg? What did Wolfsburg tell me about VW? Among many things, VW is a well-organized, well-oiled, car-making machine. I have toured dozens of assembly operations all around the world and none is as fully automated as the VW factories I saw here in the heart of Germany. Germans are famous for crafting detailed plans and then executing them to perfection. That described what I saw here and to a T.
On top of that, VW headquarters here is not merely a place where vehicles are invented and built. No, each of the VW brands has its own museum and there is an elaborate delivery centre where thousands of VW buyers in Europe come each year to collect their new cars personally – some even staying a night at a Ritz Carlton hotel that is part of the delivery centre complex.
Yes, the VW Group wants to be the world’s largest auto maker no later than 2018. I’d be careful about betting against that happening.