VW CEO looks to US, Russia to grow

Winterkorn plans to catch No. 1 Toyota by adding SUVs, pickups and minivans to lineup

VW group CEO Martin Winterkorn says that having Porsche and Lower Saxony as the automakers two main shareholders will help VW plan better for the future. Photo credit: PHILIP MEECH
Martin Winterkorn is focused on Volkswagen groups ambitious growth targets.

In an interview during the Geneva auto show earlier this month, the VW group CEO explained how he plans to catch up with Toyota, restore VWs position in the US and gain a sizeable piece of the booming Russian market.

He does not seem concerned about the prospect of soon having German sports car maker Porsche as the companys majority owner.

To have a really clear shareholding structure with Porsche and Lower Saxony is good for us, because we can now plan for the future, he said.

The German state of Lower Saxony is VWs second-largest shareholder with 19 percent. Porsche has received internal approval to boost its VW holding to more than 50 percent from 31 percent now.

Winterkorn said that key to his ambition to catch up with Toyota is the addition of more SUVs, crossovers and even light trucks to the groups model portfolio.

Were nearly the same size as Toyota in passenger cars, he said, but we lost against Toyota in minivans, SUVs and pickups.

SUVs such as the Tiguan will lead VWs growth, Winterkorn says.
US growth crucial

The VW groups goal is to raise group unit sales to 8 million by 2011 and to 10 million later in the next decade. Last year, VW achieved its highest global sales at just under 6.2 million vehicles.

In the future, VWs major growth will come from SUVs such as the Tiguan as well as the forthcoming Audi Q5 and Q3 premium SUVs, Winterkorn said.

In addition, VW has plans to build a new body-on-frame pickup truck similar in size to the Toyota Hilux. Sales of VWs pickup will start in South America and Europe at the end of 2009.

Growth in the US is crucial to VWs plans. A greenfield plant will be the first step in VWs strategy to almost double US sales to 1 million units by 2018 from 531,000 last year.

Winterkorn said a decision on the US plant will be made by mid-year. I am sure if we want to grow, we have to go to the United States, he said.

The new factory would likely make a new mid-sized car for the US to replace the Passat. Eventually a smaller car and even Audi vehicles could be built at the plant, Winterkorn said.

The new US-market mid-sized car will not be exported to other markets, especially Europe, because a 10 percent duty would skew any economic advantage to assembly in the US.

We need to produce cars that fit the American customer. We need models that hit the sweet spot more, Winterkorn said.

VW is also considering a Polo-sized car for the US, said Winterkorn. If that would happen, the car would have to be built in the US. Said Winterkorn: To make the Polo in Europe and bring it to America would not work.

Big Russian ambitions

In Russia, the VW group aims to capture 10 percent of the market by 2010 or 2011. With the help of a new plant in Kaluga, about 170km southwest of Moscow, VW hopes to increase sales to 300,000 units in Russia from nearly 80,000 last year.

Russias passenger-car sales are expected to jump to 3 million this year from 2.5 million units in 2007. Many Western executives expect the market to grow to more than 4 million in annual sales by 2012 or 2013. Winterkorn said he expects Russia to surpass Germany as Europes biggest market as early as next year.

He also said he expects all of the VW groups models to sell in Russia in due course. At the moment, the Russians love big cars such as the Audi A8, the Phaeton, Touareg and Passat, Winterkorn said, but I think smaller cars such as the Jetta and the Golf will come.

You can reach Diana T. Kurylko at dkurylko@autonews.com

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