Volkswagen Strategies to Expand Globally

VOLKSWAGEN STRATEGIES TO EXPAND GLOBALLY

In 2.009 VW' Chief Executive Martin Winterkorn, saw a great opportunity to reduce the gap, and even outsell, the amount of vehicles sold in the USA by VW and the industry's giant, Toyota.

To be able to reach this goal, VW took advantage of, first, Toyota's negative image after a series of negative headlines produced by many recalls. Second, better the quality of the available vehicles and find a way of reducing the prices, to make the units more affordable and competitive in the USA market. Also the size of the vehicles was analized.

Mr. Winterkorn rewarded employees for speaking their minds and bringing ideas to his attention. Together with the Board through brainstorming sessions, to find ways to become the world biggest automaker.

VW's global strategy not only focus on the USA, but also in other world areas in particular Asia. This is the right moment as the two main rivals, Toyota and GM are retrenching.

The production of a far better quality vehicle, better sized and lower priced, in combination to a better understanding of the different market needs, are important factors to this strategy.

An other management concern is how to grow with out becoming to big and unmanageable. In VW's organization, the critical factor is that each brand has its independence, a clear positioning, and autonomous management.

11,000. When Volkswagen (VOW:GR) CEO Martin Winterkorn said two years ago that he was determined to zoom past Toyota (TM) to become the world's biggest automaker, the notion seemed laughable. At the time, the German automaker sold 3 million fewer vehicles than Toyota, was losing ground in the U.S., and had a reputation for iffy quality. Toyota, then set to pass General Motors as the best-selling carmaker on the planet, seemed unassailable. Today Toyota is vulnerable, and Winterkorn's ambitions seem a lot less outlandish. In November, for the first time, VW built more cars than its Japanese rival. Toyota still sells more each year, but VW has closed the gap to less than 1.5 million cars. Quality continues to be an issue for VW in the U.S., but Toyota is the one suffering negative headlines after a series of embarrassing recalls. Toyota's CEO--in an act of extreme self-flagellation--has even said his company's best days may be behind it. Winterkorn sees an historic opportunity. And with the backing of his formidable boss and mentor, VW Chairman Ferdinand Piëch, he's seizing it. By 2018, Winterkorn vows, VW will pass Toyota. "VW saw a chink in Toyota's armor and realized they could act on their ambitions," says Stephen Pope, who follows the industry for Cantor Fitzgerald in London. "They went for it straightaway." All over the globe, Winterkorn, 62, is punching the accelerator. VW has agreed to buy a 20% stake in Suzuki Motors (7269:JP) to gear up for an assault on the rapidly growing markets of Southeast Asia and India. Winterkorn is going after BMW (BMW:GR) and Mercedes (DAI), committing $11 billion over the next three years to Audi, VW's luxury brand. Peter Schwarzenbauer, a board member who oversees Audi's sales and marketing, says the brand plans 10 new models, including the A1, the world's first "premium subcompact." Aiming Downmarket Winterkorn's most ambitious plans are in the U.S., where he aims to double sales by 2012. It was only five years ago that VW tried and failed to move upmarket in the U.S. Remember the Phaeton, the VW with a sticker price of $85,000? Now Winterkorn is reversing course. He's betting that Volkswagen can steal customers from Toyota, Honda (HMC), Ford (F), and others by selling Americans on German engineering and style at affordable prices. This year, VW will introduce a compact priced to compete with cars like the $16,000 Toyota Corolla. "We have to bring the masses to VW," says Mark Barnes, VW's U.S. chief operating officer. Beating Toyota won't be easy. For starters, VW sells fewer vehicles in the U.S. than Subaru (7270:JP) or Kia and still has a reputation for making unreliable,