VW's main passenger car brand posts a 10th year of consecutive sales growth, doubling volumes during the period, but faces challenges in some key regional markets.
IHS Automotive perspective | |
Significance | The VW passenger car brand has exceeded 6 million units in sales globally for the first time according to a company press release, while the brand is also showing a key SUV concept, the Cross Coupé GTE, at the NAIAS. |
Implications | The VW passenger car brand's sales increase was only 1.5% after the company adjusted sales on a like for like basis due to model classifications. VW is still looking to introduce a major overhaul of the operations of its main passenger car brand in order to improve profitability and efficiency. |
Outlook | A main component of the VW passenger car brand's future growth strategy is to add more SUVs to its North American model line-up, with the Cross Coupé GTE likely to form part of the two-model CrossBlue range to achieve this goal. in the longer term, IHS Automotive forecasts that VW passenger car sales will grow steadily but there will be more emphasis on generating higher margins. |
The Volkswagen (VW) passenger car brand has posted another new sales record in 2014 for the 10th year in succession, according to a company press release. The company stated that VW passenger car sales topped 6 million units for the first time during the year with a final sales tally of 6.12 million units. However, it adjusted its year-on-year (y/y) sales comparison as a result of deliveries for 2013 being updated to reflect subsequent statistical trends. The Saveiro, which is mainly sold in South America, has therefore been included in deliveries for the Volkswagen Passenger Cars brand retroactively from January 1, 2013, meaning the uplift was in the region of 1.5% in 2014 in purely mathematical terms from 5.93 million units in 2013 to 6.02 million units. However, in December the VW passenger car actually experienced a decline of 2.4% y/y to 529,500 units and this may point to slowing sales momentum in certain major global markets. However, VW's sales and marketing chief believes the brand can cope with a harsher market environment. He said, "We expect the existing challenging market conditions to continue in 2015. However, we believe we are very well prepared to face these challenges with new products such as the Passat or the internationally acclaimed, multi-award-winning Golf".
China continued to be the major growth market for the passenger car brand, with the VW brand making almost half its total sales in the world's biggest market during the year, with volumes rising by 10% y/y to 2.76 million. In total sales in the combined Asia-Pacific region rose 9% y/y to 2.97 million units. In the European market the brand managed to generate a sales uplift of 2.8% y/y to 1.68 million units for the full year. In Western Europe sales rose by 5.7% y/y to 858,300 units (excluding Germany) with deliveries in the brand's domestic market rising by 3.3% to 578,400 units. However, in central and Eastern Europe sales during the 12 months of 2014 dipped by 7.1% y/y to 244,700 units, while sales in Russia posted an accelerated fall of 18% y/y to 128,100 units. However, in the North American region sales fell by 5.7% y/y to 586,700 units of which 367,000 units were sold in the US, representing a y/y decline of 10%. Deliveries in the South America region from January to December decreased to 662,600 (804,300; -17.6%) units, of which 541,700 (623,800; -13.2%) were handed over to customers in Brazil.
In order to reinvigorate the VW passenger car brand's presence in the US, VW is planning to ramp up its SUV launches. Only last week VW CEO Martin Winterkorn stated simply that what VW needed in the US market was "more SUVs". To this end VW will debut a near-production-ready concept version of its CrossBlue Concept Coupé, the sportier version of the two CrossBlue SUVs that VW is planning to launch in the US market. The new version has been given the Cross Coupé GTE nameplate and features a further enhanced version of the 276-bhp plug-in petrol-electric hybrid system that has already formed the basis of previous CrossBlue concepts. The Cross Coupé GTE features attractive and modern Coupé-sedan styling on the underpinnings of the roomier seven-seater underpinnings seven-seat model, with VW envisaging the model as a cheaper rival to the BMW X6 and Mercedes-Benz GLE-Class. The Cross Coupé GTE is a ruggedly styled and modern take on the Coupé crossover SUV that hints at future VW design language overseen by head of design Klaus Bischoff. The model has a full-width grille with prominent horizontal elements and small LED headlamps, and flared wheel arches and swage lines across the doors to give it an aggressive stance. The Cross Coupé GTE is 52mm longer, 90mm wider and 26mm taller than the Touareg, which is set to grow significantly for the third-generation iteration which is due in 2017, with the US market specifically in mind.
Outlook and implications
The VW passenger car brand did well to generate overall volume growth in 2014, given the pressure that some key regional markets faced in during the year, most notably central and Eastern Europe, with Russia posting an accelerated decline as a result of the rouble crisis, and the ongoing slide in the South American market. However, on a structural basis the VW passenger car brand remains massively dependent on ongoing uplift in the Chinese market with almost half of the VW passenger car brand's sales coming from the market. As the leading brand in the world's biggest automotive market, any macro shock or downturn in China will have a disproportionate effect on the VW passenger car brand. Going into 2015 IHS Automotive currently forecasts that the VW passenger car brand will remain almost completely static going into 2015, with sales rising from there to 7.23 million units by 2019. The new Passat and later in the year the new Tiguan will help maintain growth in Europe while the company will have to wait until it launches the CrossBlue and CrossBlue Coupé in the US in 2016 and 2017 before there is any real positive progress in that market, with the new SUVs set to add around 200,000 units between now and the end of the decade when we forecast sales will rise from 367,000 units to 573,000 units by 2020. The company will also focus on improving profitability, with the unit's operating margin falling to just 2,9% last year. There will be much focus on the company's German production operation to improve efficiency and profitability over the next few years (see Germany: 19 December 2014: VW passenger-car brand pushes ahead with cost-savings plans).