Volkswagen beats the odds in Europe

Christopher Werth Nov 30, 2012
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Volkswagen beats the odds in Europe

Christopher Werth Nov 30, 2012
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In Wolfsburg, Germany, I meet Bruno Henika. He’s well dressed, with a trim, handlebar mustache, and a perfect American accent. He’s the guy assigned to show reporters like me around Volkswagen’s spotless auto factory here. Wolfsburg is a town about an hour outside Berlin. It’s where VW was born.

As other carmakers in Europe struggle for their very survival, Henika says VW is flourishing.

“Last year was the best business year in the history of Volkswagen,” he says. “We produced a little bit more than 8.2 million cars, and last year Volkswagen was, behind General Motors, the second biggest car company.”

To find out how VW has beat the odds you just have to listen for a word that comes up a lot in Henika’s tour — “Worldwide.” Volkswagen is really the only carmaker in Europe that competes globally.

Ferdinand Dudenhöffer, an auto expert at the University of Duisburg-Essen in Germany, says other auto companies in Europe such as Peugeot and Opel rely heavily on the sluggish European market, but Volkswagen has sought out economies that are actually growing.

“VW sells 30 percent of its cars in China,” he says.

At the same time, Volkswagen is still growing here in Europe. It accounts for nearly one out of every four cars sold in the European market.

Philippe Houchois, an analyst at UBS, says VW does that by building a lot of different vehicles on the same basic underbody. Then it’s able to sell them at rock-bottom prices.

“And at that level of reduced pricing, they can still make money,” says Houchois.

However, other European carmakers are losing money fast. Some 10 million jobs in Europe depend on the auto industry, but many auto manufacturers could close.

Houchois says in a few years time, instead of a European auto industry, we may only have a German auto industry to speak of.

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