VW leads all automakers in 2015 first-half sales. (UPDATE: Toyota now #1)

[mmcartalk]

Strictly by the sales-numbers (not including assets, resources, or net value) , VW edged out its two top competitors for the first six months of 2015....but only very narrowly. This was a goal the company had been trying to attain for several years. Whether this remains for the rest of the year is to be determined. In contrast, VW of America has been lagging, despite the recent redesign of the Passat to make it more palatable to American consumers.

http://www.usatoday.com/story/money/2015/07/28/volkswagen-surpasses-toyota-worlds-largest-
automaker-first-half-2015/30772509/?siteID=je6NUbpObpQ-_6P7luDfEidJMgqAxZRDnA

Volkswagen surpassed Toyota as the world's largest automaker in the first half of 2015, fulfilling a long-held goal, despite a sales slump in the U.S.

Volkswagen sold 5.04 million vehicles in the first six months of the year, edging Toyota's 5.02 million. General Motors, once the world's biggest automaker by a long shot, is now firmly entrenched in the No. 3 slot. It has not yet released its official first-half stats.

The title of world's largest automaker is largely a symbolic victory. But it does serve as an effective gauge of how global strategies are unfolding.

"It’s certainly bragging rights, and being able to communicate that they’re the largest automaker in the world is a powerful statement," said Tom Libby, an IHS Automotive analyst. "It’s certainly something they’re going to promote."

Volkswagen CEO Martin Winterkorn has long wanted the company to seize the No. 1 spot by 2018, but a spokeswoman declined to plant a triumphant flag on the news.

"We do not comment on the figures of other automakers," Volkswagen spokeswoman Jeannine Ginivan said in an email. "The goal of the Volkswagen Group is to focus on qualitative growth and not being No. 1 in sales."

Whether the German automaker can retain the No. 1 title for the full year is its next hurdle.

"They’ve been very aggressive and open about their desire to be No. 1, so it speaks to them executing their plan," Libby said.

Boosting volume has its benefits. It brings greater manufacturing scale, allowing the company to spread costs over a wider production footprint and thus bolster profits. But it can also take a toll on quality and profit margins, particularly if automakers raise incentives to give dealers a jolt.

"I think the race for volume is the wrong race. I think the race for profitability is the right race," AutoTrader.com analyst Michelle Krebs said. "So if I were running an automaker that’s the number I would be looking at. Because sales volume you can buy."

Volkswagen's ascension to the top spot is not a particularly devastating blow to Toyota, which remains immensely profitable and retains strong global market share.

Toyota's operating profit margin for its 2015 fiscal year, which ended March 31, was 10.1%, making the Japanese automaker the envy of the industry. Volkswagen's global operating profit margin was 6.3%.

"Sales volumes or being the largest global automaker has never been a goal for Toyota," Toyota spokesman Scott Vazin said in an email. "Our focus is on getting our products and services right for our customers and ensuring we are exceeding their needs and expectations. We congratulate VW on achieving its stated goal."

Despite Volkswagen’s global sales gains, it has struggled in the U.S. Industry experts say the namesake Volkswagen brand lacks enough selection and has lagged on quality in the world’s most lucrative car market.

U.S. sales of the Volkswagen brand fell 10% in 2014, despite a 5.9% gain in overall industry sales. For the first six months of 2015, Volkswagen brand sales fell 2.6%, compared to a 4.4% increase for the overall industry.

By contrast, U.S. sales for the Toyota brand rose 5.8% in 2014 and 5.2% for the first half of 2015.

In the 2015 J.D. Power and Associates Initial Quality Study, which examines new vehicles, Volkswagen's namesake brand ranked 24th out of 33 brands sold in the U.S.. The Toyota brand was 10th.

To be sure, though, the U.S. market has reflected one of Volkswagen's only significant slip-ups. The company has claimed the top spot in China, the world's largest vehicle market, and remains dominant in Europe.

AutoTrader.com's Krebs joked that the U.S. is like "an emerging market" to Volkswagen. which hasn't introduced new vehicles quickly enough in the U.S. and has failed to capitalize on the crossover movement.

"Volkswagen’s story in the U.S. is so different than their story globally," she said.

Still, the German automaker's global sales for the first half of 2015 fell 0.5% compared to the previous year, as tough economic conditions took a toll in foreign markets such as South America and Russia. The company's China sales fell 3.9% through June.

Toyota’s global sales fell 1.5% for the same period.

 

[mmcartalk]

Boosting volume has its benefits. It brings greater manufacturing scale, allowing the company to spread costs over a wider production footprint and thus bolster profits. But it can also take a toll on quality and profit margins, particularly if automakers raise incentives to give dealers a jolt.

Yep, we've certainly seen that before.....quality lapses from companies over-expanding too quickly and getting careless from too much volume.

 

[IS-SV]

Good article, because it also highlights from a automobile business perspective what VW did not accomplish as a company. Shareholders should be aware.

Also should be noted this is about sales in units, not sales revenue which strangely I see no mention of in article. VW actually had slightly higher sales revenue in 2014 (vs Toyota), but VW probably preferred to avoid discussion of any financials because of significantly lower profitability.

 

[Gecko]

In an odd way, I'm glad VW finally pulled it off, though they have the rest of the year to finish it out. They've talked so much smack (since... 2008?) and done so much posturing - glad they can see their goal in sight.

Quite frankly, even if VW does overtake Toyota this year, I doubt that it is permanent. Toyota and Lexus are both at somewhat of a standstill because of aging product and redesigns that have been delayed because of the new TNGA architecture family. Similarly, we are just starting to see a wave of new engines, which should continue to expand in the next few years. Next Prius is going to be Li-ion, and I assume that all other hybrids will follow suit with similar tech, which is a huge step

I'm not making excuses - I think Toyota and Lexus have let some competitors beat them at their own game, and many key products are coming up on redesigns. In the next 3 years, we will have all-new Camry, Prius, RX, GS, LS, CT, GX, TX, 4Runner and globally, those vehicles and their global derivatives are key drivers of sales.

 

[mmcartalk]

In an odd way, I'm glad VW finally pulled it off, though they have the rest of the year to finish it out. They've talked so much smack (since... 2008?) and done so much posturing - glad they can see their goal in sight.

Quite frankly, even if VW does overtake Toyota this year, I doubt that it is permanent. Toyota and Lexus are both at somewhat of a standstill because of aging product and redesigns that have been delayed because of the new TNGA architecture family. Similarly, we are just starting to see a wave of new engines, which should continue to expand in the next few years. Next Prius is going to be Li-ion, and I assume that all other hybrids will follow suit with similar tech, which is a huge step

I'm not making excuses - I think Toyota and Lexus have let some competitors beat them at their own game, and many key products are coming up on redesigns. In the next 3 years, we will have all-new Camry, Prius, RX, GS, LS, CT, GX, TX, 4Runner and globally, those vehicles and their global derivatives are key drivers of sales.

Another thing. Although VW generally does not sell sports cars in the U.S. except for the GTI models, , they have a number of sport-oriented models overseas, including the Scirocco and Corrado, in a section of the market that Toyota, since the Celica and MR2 were dropped, doesn't have much competition for except for the Toyota/Scion FR-S. The less-expensive Scion tC coupe, at least IMO, isn't really in the same class.

 

[mikeavelli]

Is my math wrong or is this a lead of 20,000 units?

 

[IS-SV]

Is my math wrong or is this a lead of 20,000 units?

I think your math is correct. What we don't know us how much gamesmanship/channel-stuffing that had to take place to hit that number, (the reality is its so small and not material from an accounting standpoint, it can easily be manipulated as desired to hit stated goal).

 

[Gecko]

For what it's worth, I know that BMW and Mercedes are very guilty of manipulating sales figures by forcing dealers to buy cars, changing inventory status, shuffling cars into loaner programs to mark them as sold, counting demos as sold units, etc. This is relatively common practice by both and becomes increasingly aggressive at the end of the year.

Not sure if VWAG participates in similar shiftiness, but I know this does not happen at Toyota.

 

[mmcartalk]

Also should be noted this is about sales in units, not sales revenue which strangely I see no mention of in article. VW actually had slightly higher sales revenue in 2014 (vs Toyota), but VW probably preferred to avoid discussion of any financials because of significantly lower profitability.

Not being an economist, I'm not familiar with all of the methods they actually use to determine total sales-revenue. But, to me, common sense might dictate that the fact that huge corporations like Toyota, GM, and VW, operating throughout the world, in many different countries, would sometimes make it quite difficult or complex to figure out the precise total. (I studied some college economics, but not at that level). Besides the commonly-used American dollars, British Pounds, Continental-European Euros, and Japanese Yen, there are also major Chinese, Russian, and Indian currencies, and, of course, those from dozens of smaller nations as well. Many of these currencies (if not all) of these currencies fluctuate against each other and change in value daily.....sometimes by the hour or minute. It must be difficult to figure out even one day's revenue, much less a whole year's.

 

[IS-SV]

Mercedes and BMW have made it clear they are fully engaged in a sales unit race for 2015. With that goal in mind they definitely have some flexibility outside the scope of what their auditors will comment on (in writing), as the good examples of manipulation suggest.

VW dragging it over the finish line mid year with 20K units lead (with Toyota not even engaged in the specific battle) is minor in comparison to sales battle of Mercedes and BMW.

 

[mmcartalk]

Mercedes and BMW have made it clear they are fully engaged in a sales unit race for 2015. With that goal in mind they definitely have some flexibility outside the scope of what their auditors will comment on (in writing), as the good examples of manipulation suggest.

VW dragging it over the finish line mid year with 20K units lead (with Toyota not even engaged in the specific battle) is minor in comparison to sales battle of Mercedes and BMW.

Yes, Mercedes and Audi have both made significant inroads lately into what was once a solid market for BMW. I have strong hunches why (mostly in the engineering department), but that gets into the realm of speculation and not necessarily fact.

 

[IS-SV]

Yes, Mercedes and Audi have both made significant inroads lately into what was once a solid market for BMW. I have strong hunches why (mostly in the engineering department), but that gets into the realm of speculation and not necessarily fact.

Yes, BMW, Audi, Mercedes are top 3 in tight sales race worldwide. And BMW, Mercedes, Lexus are top 3 in tight sales race in U.S. Wall Street Journal has already reported on profit erosion due to sales war. Paying to play in that tough crowd.

 

[CIF]

To be honest, I don't pay so much attention to the sales of certain brands, especially when it comes to worldwide sales. As already mentioned in this thread, what certain brands define as "sales" is quite relative. To me, the main numbers that matter are actual retail sales, and also actual vehicles in the hands of customers. Unfortunately, some of the games that certain brands are playing when it comes to "sales" is a result of too many "middle men" existing in the auto industry.

 

[IS-SV]

In an odd way, I'm glad VW finally pulled it off, though they have the rest of the year to finish it out. They've talked so much smack (since... 2008?) and done so much posturing - glad they can see their goal in sight.

.

Yep, now they have rest of year to post billions in (loss) provisions for fines, recalls, legal costs and other liabilities.

Sales race for 2015 essentially ended last week for VW. Game over.

For 2015 VW will likely have one noteworthy stat, and show more red ink on bottom line of P/L than any major automaker.

 

[mmcartalk]

Among automakers, seems like whoever strives to be #1 in sheer physical size gets into some kind of trouble. GM regained the title a few years ago, and got hit with the ignition-switch issue. Toyota achieved it and (rightly or wrongly) got hit with the sticking-throttle issues. VW either achieved it or was very close to doing do, and got hit with the diesel-emission issue. I just wonder if any other corporation is going to WANT to be #1 LOL.

 

[IS-SV]

Agreed, we are seeing a pattern of being at or near the top can be treacherous.

VW's arrogance to commit biggest fraud in automotive history likely involved an especially poor/unethical corporate culture, I expect that to surface later as investigations progress (including criminal investigations).

I'd like to hear a current update by VW on 2015 sales race... Because we know it's being discussed in private at corporate, more from standpoint of gauging negative financial impact.

 

[mikeavelli]

For me it will be more interesting to see how their non- USA sales fare. VW isn't very popular here so any drop doesn't mean much. I wonder how consumers are going to react outside of America.

 

[mmcartalk]

For me it will be more interesting to see how their non- USA sales fare. VW isn't very popular here so any drop doesn't mean much. I wonder how consumers are going to react outside of America.

Wouldn't you think, though, that, as far as the popularity issue here goes, a significant drop here in VW sales here the U.S. would have a worse effect than it would overseas, simply because the lower numbers here in America don't allow for that kind of a drop without major damage. In general, the larger the market, the more resistant it is to a cutback or recession.

 

[IS-SV]

For me it will be more interesting to see how their non- USA sales fare. VW isn't very popular here so any drop doesn't mean much. I wonder how consumers are going to react outside of America.

Good question, considering the probes taking place in several countries including home country/Germany. Also a concern to VW is passenger European car diesel sales growth stalling and other related diesel/pollution issues in that important market. Regardless the small sales unit lead for #1 was so small, it probably evaporated this week via US impact alone.

 

[mikeavelli]

Wouldn't you think, though, that, as far as the popularity issue here goes, a significant drop here in VW sales here the U.S. would have a worse effect than it would overseas, simply because the lower numbers here in America don't allow for that kind of a drop without major damage. In general, the larger the market, the more resistant it is to a cutback or recession.

Naw, cause they barely sell any cars here. If you look at their sales, they were already plummeting with a very uncompetitive lineup. Now things will only get worse. Now that they are under fire in Europe, it will be curious to see how badly hurt they are there, if at all.

Good question, considering the probes taking place in several countries including home country/Germany. Also a concern to VW is passenger European car diesel sales growth stalling and other related diesel/pollution issues in that important market. Regardless the small sales unit lead for #1 was so small, it probably evaporated this week via US impact alone.

I just looked, Sales are down 3% this year for VW. Things will only get worse.

http://media.vw.com/release/1049/

To put things in perspective, VW which sells 15-35k cars sells like BMW, Benz, Lexus here in regards to volume.