Strength & Weakness

STRENGTH

Market leader in Europe

Volkswagen is the largest European manufacture with a market share of 23.9%. When rivals like Fiat, Peugeot are feeling the effect of the economic slowdown. VW has been able to gain a significant advantage over it competitors. It has a market share of 37% in the Germany and it is sales in countries like Russia is increasing rapidly. Its ability to defy the European economic slowdown has been possible by the company’s strong financial power. It is aggressively prompting it model by giving discount and lucrative finance option at a time when rival fumble to find a strategy to overcome shrinking sales.

China

VW has a presence in this market since about 30 year. Volkswagen along with Audi outsold GM in to become the largest manufacture in the world’s largest car market.  VW would be investing $25 billion through 2018. It has had a first mover’s advantage in China and the brand is very strong among the Chinese customer. It has a far ahead in sales as compared to Toyota, Ford or Honda. The gamble of investing in China before everyone has given the company ample time to establish itself in the Chinese market. VW recently opened its 16th factory in Ningbo, south eastern China.

Latin America.

The VW Gol has been the bestselling car since 1986. It has a range of localized models such as the Gol, Fox, and Voyage which helps to offset competition from other manufacture who introduce their international model in this market.

MQB

VW strategy to jointly develop models with it other brands has helped the company save huge amount of money and consolidated research and development among the group. MQB platform on which the current generation Golf is based will be shared among nearly 40 models of the group. This gives VW a huge advantage over rival by giving it a flexibility to develop new models but also saving huge amount of money on development cost.

 

WEAKNESS

North American Market

VW was the leading foreign automobile manufacturer in the North American till 1975. It has never been able to come close to the success it enjoyed with the original beetle in North America. It currently has a market share less than 2.7% and sales are even less than much smaller rivals. VW has a very limited range of models to excite the American customers. It has no presence in the lucrative pick-up truck segment even the SUV offered by the company are expensive to rival models. Currently it plant in Chattanooga Tennessee is operating below capacity.  It has lost considerable amount of money over the years in its American operation.  VW is still bullish about making it big and investing $7 billion in the coming five years. It goal is to sell a million vehicles a year along with its subsidiary Audi by 2018. VW’s US sales were doubled by Honda and tripled by Toyota.

Lack of SUVs

The trend of increasing sales of SUVs special in the developing markets like China and India has made a VW model lineup inadequate. The sub compact SUV segment and the cross over SUV segment have had phenomenal growth in the developing markets with VW have not been able to capitalize. It also doesn’t have full size SUV to rival the like of Ford Explorer and Toyota Highlander in the US market. It current SUV Touareg and Tiguan haven’t had the success that would shake up rivals.

 

Reference

http://www.ft.com/cms/s/0/f694ea9a-d6fd-11e1-8e7d-00144feabdc0.html#axzz2rEZ0GT00 

http://www.ft.com/cms/s/0/89c81eea-1dc1-11e2-901e-00144feabdc0.html#axzz2rEZ0GT00

http://online.wsj.com/news/articles/SB10000872396390444812704577609121281323292

http://www.bloomberg.com/news/2014-01-12/vw-passes-gm-in-china-for-first-time-in-nine-years.html

http://www.volkswagenag.com/content/vwcorp/info_center/en/news/2013/10/VW_Ningbo.html

http://www.thetruthaboutcars.com/2012/10/volkswagen-under-attack-in-brazil-here-is-the-order-of-battle/

 

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