Volkswagen Group: Driving A Diverse Success Formula

The current debt crisis that is sweeping across Europe is obviously a rising concern and its impact on the automotive market is there for all to see. No doubt, the last time Europe had a crisis, the countries came together, however this time around; they seem to be tearing apart, which isn’t a good sign for anyone, especially companies that have a large stake in European markets, which definitely includes the automotive majors.

In fact, automobile industry executives have been asking the national governments of various European Union countries to come forward and solve the debt crisis before its spirals out even further and not derail the Euro as a single currency. The European car industry is one of the strongest supporters of the Euro and a change here could be a deafening blow to the automotive market.

Despite the intense situation prevailing over the European Union, Germany is still better off than other EU countries. With the automotive industry accounting for the largest sector in Germany, the economy has managed to strive on. Over 70 per cent of cars made in Germany are destined for offshore markets. Within Europe, Germany is the number one automotive market in terms of production and sales: accounting for over 35 per cent of all passenger cars manufactured and almost 30 per cent of all new registrations. The industry has also managed to keep with the times and cater to emerging markets. In fact, market predictions state that the global car market is expected to grow by 29 per cent annually all the way till 2020. Asian markets play a key role in this as demand from China has more than doubled and the Indian passenger vehicle segment has grown by a third.

Volkswagen up!

A true showcase of Germany’s might and determination is Volkswagen, Europe’s largest automaker, and possibly the most bullish as well. The company recently announced their mega-ambitious €62.4 billion investment plan over the next five years which will facilitate Volkswagen to take over the automotive world and make them number one globally. The company plans a portfolio that is as diverse as the brands they own and in doing so they are looking at addressing global demand in a manner that can best be described as geo-targeting. By introducing vehicles that offer innovative technologies, environment friendly features as well as the latest in terms of production processes, Volkswagen has definitely got its eyes firmly set on a rather bright future.

About 57 per cent of the total investment will be carried out in Germany alone. According to Prof. Dr. Martin Winterkorn, CEO, Volkswagen AG, this level of commitment domestically also illustrates our faith in the fact that Germany is still a leading automotive manufacturing nation with international competitiveness. This investment will find its way to the core brands of the Group and in the coming years we can expect a slew of new products.

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A glimpse at the way forward for the Volkswagen Group was showcased just a night before the 2011 Frankfurt Motor show. The Volkswagen Up! walked away with the top honours for the night. Its significance globally cannot be denied, however its relevance for emerging markets is what is key about this product. Indian journalists are unanimous in the thought that the Up! promises to have immense potential as a 5 door version in India. The Up! could also be offered under the Skoda badge in a value-for-money avatar means that the small car segment, which accounts for over 36 per cent of total car sales in India, could just find a new king of the roost. Another car that has potential not just in India but across multiple markets is the Skoda Mission L Concept.

This almost production ready concept sedan based on the Volkswagen Polo platform has the genes of a winner. Very much in line with the Volkswagen Vento sold in India, the Mission L is set have an Indian debut. In fact, Skoda Chairman, Winfried Vahland, in a candid discussion with ZigWheels Editor-in-Chief, Adil Jal Darukhanawala, confirmed that the Mission L would indeed be produced and sold in India by the end of next year. From cars such as the Up! and Mission L for emerging markets, the Group also displayed the latest Bentley GTC, the 7th generation Porsche 911, a custom Bugatti Veyron L’Or Blanc, and the Lamborghini Super Trofeo Stradale.

These high end machines have been re-engineered to offer a more engaging driving experience while incorporating some of the most technologically advanced systems in fuel management and exhaust gas treatment. Demand for luxury products, interestingly, has been at an all time high and Volkswagen intends on catering to this need through these brands. With two ends of the spectrum covered, the third segment, which can best be described as sustainable mobility for the future, was showcased through the Audi brand. The Audi A2 concept takes electric mobility to a whole new platform in terms of innovative material use for construction as well as a plethora of features to make it a suave urban long range electric mobile.

Each product has a purpose and that is how Volkswagen intends on proceeding with their rather illustrious group portfolio. Mature markets are now realizing that cars are no longer ‘status indicators’ and trends in western societies point towards a shift in thought from ‘exclusive and high performance’ towards ‘environmentally friendly and sustainable’. At the same time, emerging markets such as China, India and Brazil have shown an increase in demand for luxury cars and ‘status symbols’ while small cars are finding a global appeal and therefore these new car ownership patterns have to be assessed with serious consideration.

It’s a challenge, no doubt about it, as situations such as the prevailing market condition across Europe can wreak havoc, however, the need of the hour is also to create and generate for these are the elements that can truly assist in digging a tunnel out of an economic slowdown. The robust and firm agenda that the Volkswagen Group has put forward will definitely result in a healthy repercussion on the economy. As for the Group itself, the future is about sustainable solutions and those solutions need to match the demand and infrastructure that various markets demand. There is no single answer, and the only viable solution seems to be a diverse portfolio. Having said that, the Volkswagen Group seems to be on track with their future plans of driving diversity.