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Why VW's multi brand strategy will make it no.1

Published: 22 January 2010

Volkswagen has suffered some slings and arrows over the past decade. As an ambitious board quietly built up a bulging portfolio of brands through the Nineties and Noughties, some of us scoffed at the wilder empire building. Acquiring Skoda hardly seemed a smart move when the Czechs were the running joke of Europe. Seat always seemed like a vanity project. And how exactly did Herr Piech intend to make money out of hair-brained schemes involving handfuls of Lamborghinis, let alone Bugattis?

It's all come good now though. Despite trading in the worst economic recession for generations, Volkswagen AG last week quietly announced that its sales were up 1.1%. In a global market that slumped by well into double figures.

Just think about that for a minute. Two thousand and nine was a nightmare for businesses everywhere. Especially those manufacturing cars in a mature, cut-throat market thwarted by over-capacity. While American giants General Motors and Chrysler fell into bankruptcy and most groups were frantically offloading brands in fire sales, VW quietly stuck to its guns – expanded, even, as it took an audacious 20% stake in Suzuki and started the process of incorporating Porsche.

Volkswagen AG: who sold what in 2009

Two of VW's three biggest brands sold more cars in a moribund market than in 2008. Here's the full sales breakdown ranked by volume:

Volkswagen +7.8%, 3,950,000 sales
Audi -5.4%, 949,700 sales
Skoda +1.4%, 684,200 sales
Seat -8.6%, 336,600 sales
Bentley -39%, exact sales coming
Lamborghini -37%, 825 sales (NB first half 2009)
Bugatti na

That adds up to a sound 6.3 million sales, enough to propel Volkswagen AG to third place in the global rankings behind wobbly Toyota and recently bankrupted GM. How soon before VW grabs the coveted number one slot? That's Wolfsburg's stated aim by 2018-20, says group VP of sales and marketing Christian Klingler.

And guess what? Of all the brazen claims and targets set in this industry, I'm inclined to agree with Herr Klingler more than most.

How VW will get to number one

My confidence in Volkswagen is multifold: here is a brand with a strong multi-brand presence to reach into every which sector; the overlap and cannibalisation fears we voiced a decade ago have largely been cleared up (you don't really mistake Octavia, A3 and Golf owners any more, do you?); Volkswagen is a big R&D spender and the slick 99g/km VW Golf Bluemotion I drove last night is a reminder that its eco solutions are in the here and now, not the never-never; they have the scale to fill every which niche and will introduce 16 new models in 2010 – with timely launches such as the Up not far behind; and don't forget this company's global footrpint is growing with burgeoning plans for the US and Asia in particular (strengthened by the recent Suzuki alliance). Chinese sales rose last year by 36.7% to 1.4 million units. That's global reach for you.

You've got to admire Volkswagen's management. They won the very public power spat with Porsche and with leaders like Ferdinand Piech and Martin Winterkorn at the helm, I'd wager they have the visionaries with the technical, sales and marketing nous to take VW to the top.

Naturally, it won't be a smooth ride. The Volkswagen Group has its own problems and the very scale which enables it to build 3.5 million vehicles off the Golf architecture can on occasion count against it. Some brands are notably weaker than others and it's still heavily dependent on building European-market cars in high-cost Germany.

But despite all this, I'd back them to continue being the people's choice. For evidence look back no further than the remarkable success Volkswagen enjoyed in 2009.

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By Tim Pollard

Editorial director of CAR's digital publishing arm. Motoring news magnet

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