Why Volkswagen Will Race Ahead Of Auto Peers

With the upcoming Presidential election, there is a very real possibility of big political challenges; as well as, major changes to international trade policies facing the American Automotive Companies. Political changes, locally and abroad, are having an effect on the automotive industry. Britain recently voted to exit the European Union; this event, which is being called Brexit, is having a ripple effect across the world. The full result of Brexit won’t be known for two years or more, but with the automotive industry having such a large presence in the U.K, an anticipated change is in full effect. In general, for the next two years, global automakers will need to pay attention to the market; be prepared for unanticipated changes; and ready for the possible need of contingency plans. This is especially crucial as negotiations take place between Britain and the EU. Ian

Several factors have affected how the American auto industry now positions itself on the world market, and big changes have been made to reflect this new direction. The introduction of new technologies in vehicles, the growing market for cars in new developing markets, the impact of the industry on the environment, legislative responses and demands, as well as the increased expectations from consumers, are some of the factors. More international cars are being designed, manufactured and bought by American consumers and exported to foreign markets today than those exclusively manufactured by American companies, redefining the American auto industry, while having a positive impact on its economy. International brands accounted for 45% of total sales in the U.S. in 2013 and have now risen to 59% of the market, and continue to grow. While the amount of American cars has decreased in the local U.S. market share to international ones, the increase of foreign car production on U.S. soil has had the effect of creating new jobs for Americans both in the auto industry as well as in related new industries. The industry has seen huge growth numbers in the last few years with more growth expected.

The economy will remain unpredictable given the slow economy recovery in many countries across Europe, which is likely to affect disposable income of many households. Widespread cuts in the government spending level, high taxes and inflation, rising oil prices, rising unemployment as well as the rising cost of living in the UK, will certainly affect consumer spending levels on luxury brands, such as Chevrolet and Cadillac. Yet, favorable conditions in foreign markets in India and China, with the demand for cars expected to grow well into 2015, will partly help offset GM’s weak performance in domestic markets in the US and Europe (BBC, 2010).

In 1937, Germany founded the Volkswagen Industry and introduced a vehicle that was marketable to anyone. According to History, at the time of its foundation, the operation was run by the German Labor Front, a Nazi organization in Wolfsburg, Germany. The design for the original “people’s car” was done by Ferdinand Porsche. Notably, the car was meant to be affordable, yet speedy while supporting transportation needs for families (history.com). However, despite its popularity in European countries, initial sales in America were gradual on account of the companies Nazi connections after WWII (history.com).

However, it seems that some car companies have gained advantage of the current economic situation. Present market conditions are beneficial for companies that offer lightweight cars with small, fuel-efficient engines such as Smart, which has more than doubled its sales with a rise of 105% in 2008 compared to last year’s (Pollard 2008). Aston Martin on the other hand has suffered a 26% fall in its sales, year-to year figures dropping from a total of 1978 sales up until last year’s November to 1479 units up until the same month this year (Moody 2008 p. 44). As gloomy as the situation might seems for Aston Martin it is the same for their direct competitor Bentley, which is experiencing the same decline in sales. The UK Car market is in its worst condition since 1966 (Pollard 2008). The existing situation presents an unprecedented slowdown compared to the major rise of car sales in the past several years. The credit crunch has effectively crippled the entire European car market excluding only a few countries. “Warwickshire car maker Aston Martin is suffering from the economic downturn but is hoping to offset weakness in the UK and United States with bigger sales in emerging markets – with the Middle East a key target.” (Bowker 2008, para.1). The stagnation that has seized Europe presently regarding

As we move towards a globalized business world, new competitors have risen from developing nations. These nations now pose a threat to the many industries still stuck in their old ways. One industry in particular is the American auto industry that has seen a large fall in their earnings. Japan is one nation who has revolutionized the auto industry through Toyota. The world is growing and with this growth we see a need for energy and with it has come a high price at the pump. Ford Motor Co. and General Motors Corp. due to a lack of planning, inability to adjust to this energy crisis, and other problems have led to massive losses. With investors anxious for change, American auto industry in order to compete in

Global COMPETITION in the industry: Global competition has expended in the auto industry because of an increase in global trade. This has resulted in the decline of sales in the American auto industry whilst sales in the Asian industry especially China has increased. In 2009 sales in the U.S. hit their lowest point meanwhile, it doubled in Asia generally, especially in China. (loc.gov. 2014). One of the reason for this decline in the American Auto sales is because the Japanese automakers have altered the U.S. manufacturing models and are selling it in the global market at a less expensive rate. The price and innovation is attracting a lot of customers’ to this part of the world leaving the American industry to suffer.

Analysts expect the auto-industry recovery to persist as the market is benefiting from low interest rates, longer-term loans, and rebounding consumer confidence. Edmunds consultancy predicts 2014 sales of over 16 million, only one million units below the year 2000 sales record. Kristin Dziczek, a specialist at the Center for Automotive Research in Ann Arbor, says the post-great recession U.S. The auto industry is now highly competitive versus all global rivals. The United States auto industry is dominated by five major auto manufacturers: GM, Toyota, Ford, Cerberus (which owns Chrysler), and Honda, in ascending order of market share. These companies comprise 74.3% of the US market. The strength of US auto manufacturers, GM, Ford, and the company formerly known as Daimler-Chrysler, were once the dominant forces in the US market, fueled in part by their strength in the American-specific segment for pick-up trucks. However, with an increase in globalization, domestic markets must now compete with foreign competition. As foreign companies have gained accessibility into the US market over the past decade, domestic car manufactures have found it increasingly harder to compete. Most foreign competitors have been able to obtain lower raw material and production costs while maintaining equal, if not better, quality of their product. The current market has been fueled by an attraction to European and Asian automakers and car models.

The American automotive industry provides a unique and very important role in the economy of the United States of America. Not only in the United States but even around the world, the American Auto Industry is a leader in job creation, production, exportation and even in research and development. In the mid-20th century, America’s top auto manufactures have been General Motors, Ford and Chrysler. They were producing two-thirds of all the cars and vehicles sold around the world. There are still other smaller car manufacturers such as Anteras, Avanti, Shelby American, De Lorean, Dragon and several others. As of 2010 the auto industry contributed to about 4% of the United States Gross Domestic Profit and employed about 8 million jobs.

Volkswagen One of the largest automobile company in the world. Volkswagen is a company from Germany that deals with automobile manufacturing. In the list of top ten best selling cars Volkswagen’s has three cars, those us Volkswagen Golf, Volkswagen Passat and Volkswagen Beetle. The meaning of Volkswagen is ‘People’s car’, which is a German word. Slogan of Volkswagen is “Das Auto”. Ferdinand was funded Volkswagen was founded in 1937 its Headquarter is in Wolfsburg, in country Germany. Martin Winterkorn is the Current chairman of the company. Volkswagen’s revenue 94.7 billion euro in 2011 and also has more than 3658500 employees. Volkswagen is among world’s largest car manufacturer. Others are Toyota, General Motors,

The financial crisis starting in 2008 and the following recession hit hard the US auto sector. Traditional car makers had to realise that substantial changes were needed in order to maintain their strong position in the

Volkswagen a parent company of Skoda is Europe’s largest carmaker producing cars, trucks and vans. It

The automotive industry is mainly in the secondary sector of the EU economy as the automotive companies are mainly involved in the production or cars, vans and buses. There are statistics presented by (ACEA, 2015). The industry has a total production value of €681.50 billion in 2013 and this value comprises of total production of motor vehicles and total production of passenger cars. Producing motor vehicles and passenger cars in the EU accounts for 19% and 22% of worldwide production respectively. 13.6 million and 11.9 million units were registered as Producing motor vehicles and passenger cars in the EU respectively. There are 12.7

The characteristics of the global motor vehicle industry are a boom in certain places and a bust in others all due to economic conditions in different nations. Four years after tow of Detroit Michigan’s big three went into bankruptcy American car makers are going “full throttle” with sales in August hitting an annual rate that if substantiated can take them back over 16 million and that is a rate that was last hit before the economic crisis and 80% higher than 2009 when GM and Chrysler went into bankruptcy. The opposite is happening in Europe being in its sixth year slump now and with a weak economy, high petroleum prices and an aging

Based on the fact that in 2009, Volkswagen sold just 213,454 cars in the US, The Board felt the North American goal was unrealistic and unachievable. Instead of over-targeting a shrinking market, The Board felt in addition to targeting the Latino market within the United States, more focus should be shifted towards emerging markets in Asia.