Volkswagen overtakes Toyota as world's biggest automaker

Volkswagen overtakes Toyota as world's biggest automakerVolkswagen AG dethroned Toyota Motor Corp. in 2016 to become the world’s best-selling automaker for the first time, propelled by surging demand in China which has been largely unaffected by the diesel-cheating scandal, Bloomberg said on Monday.

Volkswagen sold a record 10.3 million vehicles in 2016, outpacing its rival with a 3.8 percent gain from a year earlier. Toyota’s global sales, including its Hino Motors Ltd. and Daihatsu Motor Co. units, rose 0.2 percent to 10.2 million vehicles in 2016, the Japanese automaker said on Monday.

Taking the global sales crown marks the bittersweet culmination of an aggressive expansion that former Chief Executive Officer Martin Winterkorn kick-started 10 years ago. While surging demand in China and the popularity of the upscale Audi and Porsche brands’ lineups boosted worldwide deliveries, the VW marque lost market share in Europe, its second-biggest region, following revelations in 2015 that the company manipulated diesel engines to pass emissions tests.

VW group deliveries last year rose 12.2 percent in China, where the scandal is a non-issue because the automaker sells almost no diesel vehicles there. Sales in Europe gained 4 percent, less than the overall sector, while the crisis fallout hurt demand in the U.S. and recessions cut sales in Russia and South America.

The increase in sales tax on small-engine vehicles is set to weigh on deliveries this year in China, Volkswagen’s biggest national market, while in Germany, its home country, the namesake VW brand has started scaling back its large leasing fleet for employees, slowing growth. The marque accounted for almost 6 million of global group deliveries last year, and it’s targeting more than 3 million car sales in China this year.

Toyota’s sales last year lagged behind Volkswagen mainly due to its performance in the U.S. and China, with demand for its flagship Camry sedan waning in the U.S. and sales in China expanding at a slower pace than the overall market. Looking ahead, Toyota must contend with possible trade tensions as U.S. President Donald Trump pressures foreign automakers to make more cars and trucks in the U.S.

Toyota will invest $10 billion in the U.S. over the next five years, maintaining its pace of spending during the last half decade, joining other manufacturers with highlighting projects in response to pressure from Trump to create jobs in America. After criticizing Toyota’s plans to build a Corolla plant in Mexico, Trump rebuked Japan last week for sending the U.S. hundreds of thousands of cars from what he said were “the biggest ships I’ve ever seen.”

As part of a far-reaching overhaul under new division chief Herbert Diess, the VW brand has embarked on a restructuring push outside China and will boost its lineup of sport utility vehicles, the industry’s fastest-growing segment, where it lags behind Toyota and General Motors. Growth in China in recent years had masked weak returns in Europe and an ill-fated product strategy in Brazil, a former VW stronghold. In a U.S. comeback push, it’s rolling out the Atlas mid-size SUV and smaller Tiguan crossover with a longer wheelbase.

The VW brand in Europe still largely depends on the Golf hatchback and Passat sedan and station wagon, models in market segments that are being squeezed as customers shift to SUVs. It has revamped the Golf to stabilize sales, and that vehicle’s decline has been partly offset by surging demand for the updated Tiguan SUV.
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