VW Group has rivals by the throat – don't expect any mercy

Douglas A. Bolduc is managing editor at Automotive News Europe.Douglas A. Bolduc is managing editor at Automotive News Europe.
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Volkswagen Group's big gain in European market share has put its rivals under intense pressure to make changes – or else.

How has VW Group been able to boost its western European market share to 23.8 percent after five months this year from 18.1 percent in 2004?

Rival automakers and market watchers say the increase has been fueled by massive Chinese profits, which have allowed VW Group to undercut its rivals' starting prices for new cars.

PSA/Peugeot-Citroen CEO Philippe Varin told analysts at Morgan Stanley in May that he believes VW Group is using its China earnings to cross-subsidize low prices in Europe. During a recent presentation at the Automotive News Europe Congress in Monte Carlo, Bernstein Research analyst Max Warburton said that he "absolutely" agrees with Varin's assessment.

Warburton said that while VW Group's products are more attractive and the brand is better managed: "Let's be honest, price is the biggest single reason" for this huge increase in share.

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