automakers
How VW is beating the slump in Europe
May 1, 2013: 8:48 AM ETThe German giant is still gunning to be number one in the world. The slowdown at home doesn't seem to be stopping it.
By Doron Levin
Bad boys: Martin Winterkorn and Ferdinand Piech.
FORTUNE -- The Volkswagen AG juggernaut, which posted an uncharacteristic profit decline this week for its first quarter, won't be slowed by a weak European economy that has hurt auto sales.
To the contrary, the European slump may be hurting its weaker competitors more. Paradoxically, a period of economic weakness could help the German automaker strengthen its position relative to the rest of the field when the continent inevitably rebounds. VW, aiming to achieve global industry leadership by 2018, looks more likely than ever to achieve its goal, maybe earlier than planned.
The three automakers most vulnerable as a result of the European decline are Peugeot, Fiat, and Opel. Fiat, disproportionately reliant on Italy, has failed to keep up in terms of design and global scale. Likewise, French automaker Peugeot has failed to win enough non-French customers.
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Opel, a subsidiary of General Motors Co. (GM), has joined hands with Peugeot to share costs -- but it faces enormous capital costs, brand weakness and continued political difficulty shrinking its production capacity to match falling volume and market share. GM, as it tries to fix Opel, is holding fast to its dreams of one day turning Chevrolet and Cadillac into European-recognized brands.
Sergio Marchionne, chief executive of Fiat and Chrysler and an outspoken VW rival and critic, predicted on Monday that Europe will stay depressed for some time, according to a report in the New York Times. In an oblique reference to VW, he reportedly said "those who have claimed a Teflon approach are getting that coat taken off."
Fiat's profit for the quarter fell 88%, rendering it barely at break-even for the period.
VW's chief executive, Martin Winterkorn, remarked in a statement "the markets were sluggish, especially in Europe, and not least in Germany. But we remain confident overall that we can pick up speed over the rest of the year." VW affirmed its full-year financial forecast.
Profit for the German automaker and European market leader fell 38% to 1.95 billion Euros ($3.15 billion) from the same period a year ago. Revenues for the VW Group, which includes Audi, Skoda and Seat, fell 1.6% to 46.6 billion Euros. The revenue weakness was due to fewer vehicles sold as well as weaker prices.
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Innovative engineering, which allows VW to build a large number of models and brands worldwide on the same basic architecture, has kept capital expenditures from overwhelming earnings. The rise of VW's Audi luxury brand after years of development is also adding to the bottom line. And VW's prospects in North America are bright, as the automaker adds new models and manufacturing capacity to the region.
The wild card for the weaker players will be the extent to which governments decide to prop them up until demand grows stronger. Countries are exceptionally nationalistic and sentimental when it comes to their automakers, the U.S. no less than others. European Union rules preclude many forms of direct aid -- but the indirect ways to help limping automakers are many.
As GM and Toyota (TM) have discovered, global leadership can be a poisoned chalice -- somehow making its holder prone to all kinds of unanticipated reversals and disasters. VW isn't deterred; it intends to find out what No. 1 feels like and what advantages it might confer.
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What to expect at the Shanghai auto show
The growth of the Chinese auto market, once a playground only for the wealthy, is being fueled more and more by consumers who aren't elite. At the same time, the rich are buying more luxury than ever before.
By Doron Levin
FORTUNE -- Back in the day when Toyota (TM) and the rest of Japan Inc. appeared on the verge of capsizing U.S. automakers and suppliers, industry figures dutifully boarded airliners MORE
Apr 18, 2013 10:41 AM ET -
Ford and Toyota feud over whose is bigger
A quibble between two of the world's most successful automakers.
By Doron Levin
FORTUNE -- Ford Motor Company can't be faulted for bragging that it sells more of a single car model, the compact Ford Focus, than any automaker in the world -- even if the claim is debatable, given Toyota's rebuttal that its Corolla compact is the true champ.
The number of cars separating the two models isn't that large. Which MORE
Apr 15, 2013 11:47 AM ET -
The threat Hyundai faces now
Korean auto giant Hyundai is still surging, but conflict at home could curb its growth.
By Doron Levin
FORTUNE -- The remarkable rise in popularity of Hyundai and sister brand Kia with U.S. car buyers has largely unfolded over the past few years against a backdrop of calm on the Korean peninsula. As tensions rise in the manufacturer's homeland, some are asking how unrest might affect Hyundai's surging global business.
The prospect MORE
Apr 4, 2013 7:22 AM ET -
The Santa Fe: Hyundai's love letter to America
Hyundai's newest CUV, the Santa Fe, couldn't be more in line with U.S. drivers' tastes. And the Korean auto company is counting on that.
By Doron Levin
FORTUNE -- The growing preference among American motorists for crossover utility vehicles -- so-called CUVs -- is reflected by the stream of new variants to reach showrooms. The latest? Hyundai's seven-passenger Santa Fe.
Hyundai has risked confusion by calling its new model the Santa Fe -- MORE
Mar 18, 2013 12:18 PM ET -
Inside Toyota's radical reorganization
A management shakeup and reorganization at Toyota spell major change for an automaker on the mend.
By Doron Levin
FORTUNE -- After widespread vehicle recalls and safety concerns badly dented Toyota Motor Corp.'s reputation and finances in 2009, Akio Toyoda -- president, chief executive and heir of the founding family -- vowed to remedy the automaker's famed insularity.
His goal: make Toyota more nimble and responsive. A management shakeup and reorganization announced MORE
Mar 7, 2013 3:06 PM ET -
Inside the kerfuffle over GM CEO's pay package
GM is hamstrung by its relationship with the U.S. government - but not for long.
By Doron Levin
FORTUNE -- Pity poor Dan Akerson, chairman and chief executive officer of General Motors Co.
Not only does he earn a third of what his peers in Detroit are paid to run global automobile companies, he gets beaten up by the Oversight Committee of the House of Representatives that issued the (seemingly false) report MORE
Feb 28, 2013 9:15 AM ET -
GM wants to sell Americans on diesel
A version of its new Cruze compact features something few American cars have - a diesel engine. The question is, will it sell?
By Doron Levin, contributor
FORTUNE -- General Motors Co. is attempting to bury bad memories of failed diesel cars from the 1970s and 1980s. The Detroit automaker is attempting to turn to a fresh page with the new Chevrolet Cruze Turbo Diesel.
The latest version of Chevrolet's (GM) popular MORE
Feb 11, 2013 10:18 AM ET -
Who made the better viral video? BMW vs. Mercedes Benz
Both German luxury automakers have ads on the Web. Which one's more click-worthy?
By Chip Lebovitz, contributor
FORTUNE -- Last month, BMW and Mercedes Benz each released online-only commercials within 48 hours of one another. Both quickly went viral, but couldn't have been more different. "The Catch" features the just-released Mercedes Benz SLS AMG Roadster, a Formula 1 driver, and a golf pro. The pro tees up, smacking drive after drive MORE
Jul 13, 2012 12:18 PM ET
