PARIS (Bloomberg) -- Volkswagen AG's goal to surpass Toyota Motor Corp. in sales and profitability by turning out more models and building cars on shared platforms is stoking unwanted competition among its own brands.
VW's strategy allows Europe's biggest carmaker to build a wider range of models across brand lines at a cheaper price by using the same engines and components. It also means customers may opt to spend less money and buy a car from the Skoda and Seat units instead of the more expensive VW brand.
"I specifically came here to look for a VW but Skoda is so much cheaper," said Manfred Hennerkes, a factory mechanic at Siemens AG, taking a seat in a Skoda Superb at the carmaker's showroom on Berlin's Unter den Linden boulevard. "I don't care about the nameplate, it's essentially a VW for great money."
VW, undergoing a merger with Porsche SE, is seeking to overtake Toyota by 2018 by expanding sales and a line-up of about 200 models across its nine brands. It's a strategy that contributed to record losses at U.S. rivals General Motors and Ford Motor Co. before they reversed course to reduce the number of brands and shed divisions.
"VW is becoming quite complex," said Anil Valsan, director of automotive research at London-based Frost & Sullivan. "It remains to be seen to what extent VW can afford some of its brands cannibalizing each other."