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Volkswagen's U.S. Group Revving Up
The Volkswagen Group has all the reason in the world to celebrate not only because of its continuous good sales record but also because its fortunes in the United States are revving up.
Europe’s largest automaker reported that its global sales had risen by 9.3% year on year in 2006, reaching a record 5.73 million units. And that’s not all! The other brands of the giant German automaker are also doing pretty well around the world. Stateside, the Wolfsburg, Germany-based Company may also be looking at a rebound after experiencing some losses. It predicts that it will be able to break even by 2009.
However that is not the picture that an analyst at the Global Insight is seeing. According to the analyst the company will still face difficulties in 2007 as it slows the frequency of new model launches and its supervisory board continues to be rocked by power struggles. Like for instance according to some recent media reports it looks like Chairman Ferdinand Peich may not step down in April 2007 as scheduled plus there is the corruption scandal wherein top Volkswagen executives are involved.
"If this happens, the ongoing internal struggle between the company's two largest shareholders, Porsche and the State of Lower Saxony, is unlikely to come to an end," said Global Insight's automotive analyst Thomas Ryard.
It should be noted that last November 2006, a lot of investors have backed out when Volkswagen dismissed its Chief Executive Bernd Pischetsrieder after a much publicized boardroom argument. The said incident has made investors to question whether the company’s restructuring plans could be sustained.
According to Ryard, "A potential brand reorganisation and management changes may stifle the impact of the ForMotion Plus action plan, which should lead the company to record profit levels in 2008.”
Volkswagen’s dubious outlooks stand out amidst what is considered a more upbeat stance among other Germany carmakers in the US this year. American rivals GM and Ford are expected to struggle even harder if they want to get a market share and to keep their post as the largest automakers in the world.
Executives from other German carmakers have been falling over themselves at the Detroit Auto Show announcing positive forecasts for 2007. Tom LaSorda who leads DaimlerChrysler AG’s Chrylser Group also said that 2007 would see his unit defy its recent sales slump to sell more than the 2.7 million vehicles it had sold in 2006. "The intention is profitable growth. We definitely want to be above 2.7, but we'll do it in a profitable way," he was quoted as saying at the Detroit Auto Show.
BMW not to be outdone has also something to say, "We will see new record figures at all of our brands”, as stated by Michael Ganal head of sales at BMW. The automaker has sold around 1.37 million units in 2006, a 3.5% increase from 2005. Despite the expected staggering overall US market, BMW is optimistic that it would find success by staying active in premium segment. The Munich-based company is also predicting a 2006 pretax profit in excess of 4 billion euros.
German automakers could expect to increase their US market share for this year but of course at the expense of both domestic and Asian rivals. According to Bernd Gottschalk, the president of Germany’s VDA Automotive Industry Association said in the recent Detroit Auto Show, that Germans would make their inroads by selling more luxury vehicles and diesel cars. At present, German car companies hold 5.8% share of the US market and sold a total of 921,000 vehicles by 2006.
About the Author: Growing up with three brothers, Natalie Anderson became exposed early to the world of automobiles. This 29-year-old account manager now dreams of having her very own top-of-the-line vintage car.