Volkswagen says its core VW brand is 'no longer competitive' financially
cnn.com
cnn.com
It definitely has. But the current issues seem to be more due to a number of other factors.
During the pandemic, pretty much every German car manufacturer tried to more or less get rid of their lower priced models and focus on the high end market to increase margins. As far as I know, this was largely driven by supply chain issues and shortages making lower priced models financially less attractive for the car manufacturers. VW is not a luxury brand so they suffered from this more than other German manufacturers. With inflation and recent world market developments (the Chinese levelling up their car manufacturing), this situation has only got worse.
But the most important factor may yet be electrification. VW doesn't have an edge in electric cars and their product lines (the ID3, 4 etc.) are not really competitive. They also failed to vertically integrate. German car manufacturing still is largely a supply chain coordination game, making it hard to innovate quickly.
Last but not least, I guess the current insane energy policies and quite literally cooling economic environment in Germany don't really help as well.
They must be doing something right because the ID.4 sells like hotcakes in Scandinavia, Germany and other European countries. It was the #1 EV in 2022 in Sweden, and #2 in Germany behind the Tesla Model Y. (ID.3 was #3)
Selling a lot of cars doesn't mean it's a profitable business.
I am quite sure the German government will come up with new tariffs, subsidies and regulations to make it look as if they can continue to dominate the local market though, hurting consumers and the German industry even more along the way.
Phrased that way I would generally agree with you. I think not only European, Japanese and Korean brands but Tesla too is in for a bit of a rude awakening once all the Chinese stuff really hits Europe.
Germany is reliant on exports. Tariffs are not helpful there. If you can’t manufacture a product at competitive prices on the world market, Germany has no real business in manufacturing anything anymore unless in a war economy.
As a leading economy in the EU you might have the means to stretch that out for some time, but ultimately this makes matters worse in the end.
Germany is currently trying to subsidize what remains of the industry at the cost of consumers. This is already causing substantial backlash from consumers, voters and even the federal courts. Good luck with all of that.
Ultimately, I believe this will be a good thing for Germany in the long run. But for quite some while, this will cause substantial pain to a lot of German citizens.
Tesla will make a lower cost model soon and a Model 3 will likely also come from Brandenburg soon, so right now VW competition is not even fully there yet.
Question is whether they can sustain that.
This is not really surprising or bad strategy. VW has zero chance in China and America is a very underdeveloped market so focusing on Europe makes all the sense in the world. The question was whether they have competitive products right now and I find it really strange to say they don't when they have the #4 and #5 best selling EVs in all of Europe (not just Germany):
https://www.statista.com/statistics/972845/electric-vehicles...
There are more very successful VAG products in there too, like the Audi eTron and the Skoda Enyaq. They might be unable to sustain this -- I don't know -- but right now, as a Swedish dude in Sweden, VW is very much looking like one of the winners judging by what cars I see on the road.
Also: any statement to the effect of "Tesla will release a new product soon" I will take with a mountain of salt, considering their track record.
You can have high sales numbers and still not be competitive if you don't turn those sales into viable profits.
I think it's also important to distinguish between the VW brand and company. The article explicitly says:
> “With many of our pre-existing structures, processes and high costs, we are no longer competitive as the Volkswagen brand,” Thomas Schaefer told staff during a meeting at the German carmaker’s headquarters in Wolfsburg, Germany, according to a post on the company’s intranet site seen by Reuters.’
So there can be no doubt that the VW brand is in trouble with regards to competitiveness.
The company may still be doing "fine" due to high end brands still performing well.
I guess the confusion here is between the company being competitive -- as in making money -- and having products that are competitive in the marketplace -- as in consumers buy a lot of them and frequently pick them over other options. Slightly different meanings for the same word -- fair enough. I was thinking of this as a consumer/man-on-the-street looking at all the VWs, not as someone looking at quarterly earnings.
This is almost certainly going to boil down to being the same in the end.
If your company/brand is not competitive, you won't be able to sustain competitiveness in sales long term. Unless you are a rather novel growth company who are able to get enough investments to compensate for the non-existing profits.
VW has a special place, because it's intertwined with the state and German politicians will do anything to make it look as if they are still doing okay and have a bright future.
VW used to be the cheap option for the masses, hence the name "Volkswagen" = "people car". They could then successfully push out competitors by gradually raising quality and prices. But by now, VW is one of the most premium brands in Germany. So their usual "raise quality and prices" strategy has stopped working.
My parents' generation loved their VW Golf, which back then was a cheap car for students. But nowadays, a new VW Gold can cost €44000 which is completely out of reach for most students and young adults. Similarly, they used to have ads mocking the fact that a VW Transporter was an extremely popular family car used for vacations and camping trips. At €90000 for a Volkswagen Transporter (version 7), it's now become more of a status symbol or collector's item.
Actual families will buy a €8000 Dacia transporter. And in line with Christensen's talk, it looks like Dacia is now scaling up quality and raising prices, thereby pushing VW out of the budget market into the much smaller premium segment.
Who would have thought that pilling up incompetent energy policies one after an other would come back to bite them.. And if only the energy policies where the only bad choices they were making..
The last beetle sold in Brazil (1986) was worse than German beetles from the 1950s.
Plus, they helped the military dictatorship; probably because it secured their market.
I see VW as nothing but evil, but in spite of all this, its brand remains popular in Brazil.
There is no city cars in their lineup - the Polo is now looks like and priced like a Golf from a few years back and the Up got canned.
This is a problem across most manufacturers. Ford recently canned the Fiesta, the best selling car in the UK.
We found very high pollution values inside cars which in hindsight is very much not surprising due to what you noticed. A carbon filter brings it way down.
Having been lied to 20 times in a row and still trusting the 21st time is a sign of other problems. It is a good indicator of a populations submissiveness. Admitting to oneself that one has made a mistake investing a lot of money in a product, takes some guts most people don't seem to have. Same as admitting your oh-so-democratic government has obviously been corrupted by the same corporate elements.
The issue is admitting this leads to admitting one was a coward for tolerating it. That's why people double down on the most idiotic positions. I've seen flat earthers and corona deniers do it same as dieselgate apologists.
Unfortunately many of the top trading companies invest a lot of money into anti-regulation propaganda. It's the "trickle down economy" of the 21st century.
Know exactly where you're coming from. Have been intrigued by the e-golf recently, but
Plus the financing plans where they're seemingly deciding to do almost the exact same thing Mitsubishi did in 2001 in offering 0% interest rates and no down payment to grab the Atlas and Taos because they want to eat into the market share that the Nissan Rogue and Kia Sorento have. Carlos Ghosn's stupidity in chasing volume via financing anyone who could breathe at shockingly low interest rates nearly destroyed Nissan and was the reason why he got ousted from both Renault and Nissan. Meanwhile the other manufacturers are seeing the dour consequences of abandoning the $30,000 and below segment and chasing the high end $70,000+ full size SUV customers, which is a tiny fraction of a market that's shrinking further because the upmarket push creates a feedback loop.
Volkswagen does not have the cheapness of Nissan and Kia to make up volume, and they don't have the perceived robustness of Toyota to build a base to move upmarket. They're stuck, and they're slinging Taos' and low financing out like candy hoping it will save them and bring back former Golf customers.
But they have great reviews for 2024 Taos and its under 30k, buts its new, so who really knows. So much new tech in 2024-2026 coming out, models are changing pretty heavily during refresh.
I think word of mouth is to avoid them.
Software is atrocious. Everything else, extremely happy. While everyone else queues up in an endless Costco line to save $10 off their $100 gas bill, I just relax and order sushi while my car chugs free Level 1 electricity outside.
https://www.statista.com/statistics/1186629/workforce-major-...
https://www.statista.com/statistics/316786/global-market-sha...
https://www.consumerreports.org/cars/car-reliability-owner-s...
The whole of Europe is headed the same way.
Those people, the ones running the dealerships and the ones with the union jobs. They're the ones buying the cars.
I think the key here were big management blunders like Dieselgate etc. Other car companies that use these same models are doing fine.
Yeah, I call BS.