Volkswagen To Unveil 12 Models To Spice Up Competition

Anthony Fontanelle
September 13, 2007

Volkswagen AG plans to unveil 12 new models over the next three years to increase sales by 33 percent and to spice up auto competition. This is Volkswagen’s effort to compete closely with auto giants such as Toyota Motor Corp.

The deliveries of Europe's largest automaker is expected to rise to eight million vehicles in 2010 from a record six million vehicles in 2007, Chief Executive Officer Martin Winterkorn told reporters at the International Motor Show in Frankfurt, Germany.

Winterkorn, who has said he sees Toyota as his main competitor, took over Jan. 1 as the German automaker’s chief. He plans 12 all-new models through 2010 that include a minivan built with Chrysler LLC, a remake of the Scirocco sports hatchback and a compact sport-utility vehicle called the Tiguan. Toyota, the world's second-largest automaker, plans to manufacture 9.42 million product lines this year.

“It is one thing to launch new models,” said Stephen Pope, head of equity research at Cantor Fitzgerald in London, who has a “buy” recommendation on the automaker’s shares. “However, in a crowded market, too many new products in rapid succession can prevent one product from establishing a clear mental impression, and price competition is here to stay.”

Hans Dieter Poetsch, VW’s chief financial officer, forecasted an increase in profit in 2008 and said the Wolfsburg, Germany-based automaker planned additional costs cuts next year, without being specific. Winterkorn, meanwhile, said he will seek annual productivity gains of ten percent.

In a statement released last July, the automaker said it will achieve pretax profit of at least 5.1 billion euros ($7 billion) in 2007, a year earlier than originally forecast, after scaling back the Volkswagen brand's west German workforce and getting employees to concur to work more hours without additional compensation.

“Our goal is not just growth but profitable growth,' Winterkorn noted. “The Volkswagen group's August sales rose 11 percent from a year earlier to 461,000 vehicles, while eight-month sales gained 8.4 percent to 4.7 million units.” Volkswagen brand sales rose 12 percent in August.

At the Frankfurt Motor Show, Winterkorn launched a small- car prototype dubbed the UP! The car features an engine mounted in the rear, similar to Volkswagen's original Beetle. Aside from the modern cutting-edge equipment, the automaker incorporated conventional parts accessories such as the Volkswagen head gasket, radiator, and the like. The UP! will be designed for city driving in western Europe and as a cheaper model for developing countries, Winterkorn added.

The automaker also strives to repair its primary trouble spot – the North American market. How bad is the market for the automaker? In the region, revenue for the first-half dropped 4.2 percent to 6.84 billion euros. Volkswagen, which has posted a loss in the United States since 2003, stopped providing profit figures for North America this year.

Stefan Jacoby became VW's North American chief effective Sept. 1 and announced plans five days later to move the U.S. headquarters to Virginia from Michigan and eliminate 400 out of 1,400 jobs. Volkswagen is also considering whether to build a U.S. factory.

In an interview, Jacoby said Volkswagen plans to triple group U.S. sales to one million vehicles by 2018, with the core brand selling 800,000 cars and sport utilities and the Audi luxury unit delivering 200,000 vehicles. The automaker’s U.S. sales record was 569,696 cars and vans, set in 1970.

To recuperate from sales doldrums, the German automaker is entertaining a new strategy. “In the past we pushed ourselves a little bit into niches with our advertising, for example. We need to go more in the direction of a volume player,' Jacoby said.

Source:  Amazines.com