Following many well documented shortfalls and missteps in the North American automotive market, a corporate ouster worthy of a daytime soap opera, and a major ramp in competition, Volkswagen met its goal of becoming the world’s largest automaker — albeit for the first half of the year — unseating Toyota as the reigning world champ.
Though VW managed the feat three years ahead of its target goal, it’s not a done deal. Nearly a third of VW’s sales are shuttled to China, where a volatile stock market (one that’s been seeing some rough patches of late) is putting a cautious tone on the country’s improving consumer landscape. That could spell concern for VW’s premium Audi and Porsche brands.
In the States, there’s still the problem of VW’s aging lineup in a climate of heated competition. Single vehicles like the Golf Sportwagen and the Jetta have performed admirably, but Volkswagen is fighting fresh rivals with dated SUVs and crossovers like the Tiguan and the Touareg, in one of the most competitive segments in the market. Brazil, too, has been a tough spot for the German company.
While the company’s modular platform strategy seems to be paying dividends worldwide, getting all of its markets to work well with each other has been a challenge for VW, and something that Toyota does exceedingly well. “The hunt for scale only makes sense if it boosts synergies, something VW hasn’t really been able to achieve,” Stefan Bratzel, who is the head of the Center of Automotive Management think-tank, told Reuters. “Dependence on China is VW’s weak spot and managing such a large group inevitably poses problems.”
Through the first six months of 2015, volkswagen had sold 5.04 million vehicles worldwide, topping Toyota’s 5.02 million. Per Reuters, Toyota said that its sales “were dragged down by a slowdown in emerging markets and increased taxes on mini vehicles in Japan.”
Banking on new, bolder styling, Toyota’s shortcomings may not last much longer. A new Prius — the first major redesign since at least 2010 — is expected to make its debut soon, and a new Tacoma will help solidify its place in America’s truck-happy market. Armed with a fleet of new or refreshed vehicles, General Motors — which usually takes third place on the global scale — will pose a threat of its own.
Volkswagen, in order to secure its place at the top, will have to double-down on the American market and the relative sales security it provides. This means a new Tiguan, a bolder Passat sedan, a renewed Touareg, and a more exciting Jetta should be in order if VW wants to take its place at the head of the table seriously. A new entrant slotted between the Golf Sportwagen and the Tiguan to compete in the compact crossover space would also be instrumental in shoring up sales.
Volkswagen owes its rise to China, but the company can’t bank on that for long. The market — regarded as the world’s largest — is too volatile at the moment to be able to predict three, five, or 10 years out. But North America — coupled with the European market that’s still getting back on its feet — offers Volkswagen ample opportunity to more firmly establish itself as King of the auto industry. It just needs to grasp it.