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Under VW CEO Martin Winterkorn sales were up by 77% to 10.2 million units, revenues by 92% to 202 billion euros, and net profit tripled to 10.8 billion euros from 2007 to 2014. Winterkorn's contract ends in 2016.

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VW's global plans to increase sales and surpass Toyota. Efforts to increase sales in the U.S. by redesigning the Passat and having it compete with the Toyota Camry in the same price range of about $20,000. To develop new small cars for Asian markets VW has taken a 20% stake in Suzuki, giving it access to small car technology. Suzuki deal gives VW access to the Indian market. VW plans are to double the network of dealers in China to 1600 in 5 years and a sales target of 2 million cars for China. VW has stumbled before in the U.S. and lacks a presence in Asia outside of China. This is about to change.

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Russian oil policy at work in towns like Kalyazin, 100 miles north of Moscow, and across Russia. Gasification program is being extended, plan is to increase coverage from 53% to 60% of the people in Russia in the 2005-2007 program. Increase prices to discourage wasteful use and promote energy saving technologies in cooperation with German companies so that more gas is available for export at higher world market prices, especially to the European market. Use profits to promote exploration and increase exports. Germany gets 45% of its gas from Russia and has built close relationships with Gazprom. See the article in BW, July 31, 2006, Jack Ewing, "The Lines that Bind" and references to German-Russian ties: 1) Gerhard Schroeder, former Chancellor, as managing director of the pipeline joint venture, the $5.7 billion North European Gas pipeline formed by partners Ruhrgas, BASF and Gazprom. Ruhrgas owns 6.4% of Gazprom, and its CEO Burckhard Bergmann sits on Gazprom's Board. 2) The survey by Berlin pollster Forsa shows that 75% of Germans support the pipeline project, 45% consider Gazprom a reliable energy supplier vs. the 26% who consider Saudi Arabia as dependable. 3) At an industrial fair in Hanover German business leaders supportive of Gazprom as follows. Klaus Mangold for Daimler management board member considers it " a totally normal market economic process" for Russia to have threatended to supply China with the same gas if European countries cultivate other sources of energy supply. Michael Gloss, German Minister of Economics and Technology, says its good thing to have a neighbor close to home as a supplier. Ruhrgas, Essen based, is a subsidiary of Dusseldorf company E.O.N., and Wintershall, Kassel based, is a subsidiary of BASF. Wintershall management Board member Rainer Seele, speaks of not just partnerships but friendships. 4) Interlocking ownership of assets between Gazprom and the German companies. Gazprom 35% ownership of the assets in the WinGas Joint Venture, Wintershall gets 35% of the equity and 25% of voting shares in the gas field that supports the pipeline. Ruhrgas traded assets in Hungary for 25% ownership of the same gas field. 5) The German relationship under Merkel changes little because she has no options, German suppliers have long term contracts with Gazprom. This article shows how the Russian policy is being shaped on the ground in small towwns like Kalyazin. The one on Gazprom about "The Lines that Bind," shows how the policy is to build relationships with German suppliers, interlocking ownership of assets, increasing the supplies to Germany from the current 45% to over 50 %. Using German investment in joint venture with Gazprom for exploration and development and building pipelines and securing long term contracts at higher prices. Note the reference in article "Can Gazprom Keep the Gas On?" by BW's Moscow Bureau Chief, Jason Bush, BW July 31, 2006- ironically the policy that caused a lot of controversy between Russia and Ukraine about Russian energy prices will actually provide Gazprom with more profits to put into exploration. Forecasts referred to by Bush show that it is expected to earn $20 billion on $62 billion in revenues. ...

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Slower growth expected for VW in 2012-2013.

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Alan Mulally focussed attention on Ford brands such as the Taurus, and the Fusion, to improve quality and fuel efficiency. To do this he sold brands acquired earlier- Land Rover to Tata Motors and Volvo to Geely. Under his management Ford pushed ahead with globalized product development and building a presence in the small car market. Ford still has weakness in the European and Asian markets. In Europe a large number of manufacturers are competing for a slow growing market and price competition has cut into profits. In Asia, Ford was slow to enter the Chinese market. As a result its sales in China lag far behind VW and GM, with only 2.7% market share. Mullaly is investing $1.5 billion on new factories in China, including two assembly plants and an engine plant. One of the plants in the southern city of Chongquing will produce an SUV and a luxury car. Mulally wants to see 70% of Ford's growth in this decade from Asia. The other problem facing Mulally is reviving the Lincoln brand which has seen a sales decline of 63% since 1990. Ford has hired a designer who worked on the Cadillac to redo the Lincoln's design. Mulally plans to cut the 900 Lincoln dealers to 600, to reduce the price competition for smaller sales volume. He is asking the remaining dealers to invest $2 million for new showrooms that will compete with Lexus in their look and feel. Asessing what has been achieved at Ford so far one sees the progress in pushing up quality. Ford now ranks above Toyota in J.D. Power quality surveys with its cars getting higher resale prices than some Toyota models. Ford cars are also being well received by new car buyers with market share up for the second consecutive year. This would have been unthinkable only a few years ago. Also significant is how Ford under Mulally's direction managed to make good use of the $23 billion loan secured in 2006, avoiding bankruptcy and turning the corner to profitable operations. Ford earned $6.6 billion in 2010, after losing $30 billion from 2006 to 2008. Ford's challenges going forward are how to sustain profitable growth, manage $19.1 billion in debt and a junk-bond credit rating, and maintain the momentum without reverting to a dependence solely on SUV's and larger vehicles for profits. Chairman Bill Ford is forthright about Ford's history of wasting opportunities during the good times- of "losing the plot in the good times." Mulally makes the same assessment at a November town hall meeting of 200 employees - Ford is good at crisis managment he says but then "forgets why we're here." For Mulally a bit of inspiration from Heny Ford himself counts, this being a poster from 1925 that hangs on the office walls, a Saturday Evening Post cover with the slogan: "Opening the highways to all mankind." Mullaly says looking at this makes him cry....

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Evern though the Detroit carmakers initial quality as measured by J.D. Powers Initial Quality Survey is slightly higher than Japanese carmakers in pickup trucks, the Japanese carmakers still have a lead in the more popular cars and in crossovers. The Prius is made in a factory in Japan which ranks as one of the highest in quality. Quality is higher at plants in Japan for Toyota cars, and a bit lower here in the states for Toyota plants. Its on a par with Ford for the Toyota cars made in the USA. As the quality gaps shrinks to near zero between the quality of American and Japanese cars made in the USA, Toyota continues to maintain its edge in quality for its plants in Japan over both the Americans and the Germans. And the one carmaker that intends to surprise is Hyundai which surpasses Toyota, Honda, Ford and Chevy in quality and does this with a lower price. Consumers are noticing and making the switch, as Hyundai's market share is increasing. See Hyundai link. Here are some of the results. First the plants that produce the best quality, as measured by the J.D. Powers Initial Quality Survey. A survey of 80,900 cars between November 2008 and February 2009, for the first 90 days thses cars were driven, using the number of problems per 100 vehicles. All numbers refer to problems per 100 vehicles. Toyota plants in Japn that scored highest- Higashi-Fuji at 29 making Lexus SC and Toyota Corolla, Fuijimatsu at 30 making the Prius, Kyushu at 34 making the Lexus ES and Highlander. At the next level German plants, Bremen at 40 making the Mercedes Benz Classes- C, CLK, SL, and SLK. Daimler in E. London, S. Africa at 38, and BMW at 40 in Dinggolfing, Germany. And a cluster of Japanese and American plants in the USA that produce cars of comparable quality. Honda in E. Liberty Ohio at 41, making the Honda Civic, CRV and Element. GM at Oshawa, Ontario, at 42 making the Buick LaCrosse and Chevy Impala at 42. GM at Bowling Green, Kentucky at 43, and Toyota, Georgetwon, Kentucky making the Avalon and Camry at 43. What is notable from the last survey in this highly competitive market is the following. 1. Hyundai at 91 problems per 100 vehicles surpasses Honda at 95. Better quality at a lower price, so its no wonder Hyundai is gaining market share and is the new carmaker gaining a presence in the USA. 2. Toyota is at 101, Ford at 102, Chevy at 103, so the difference now in carmakers quality is perception, perception, perception. Its about lifestyle, what you like to be associated with and what you want your friends and neighbors to think about you in your choice of car, younger buyers who are the next generation that makes or breaks your business, the new trendy things among younger people, and design that appeals to them. 3. VW is at 112. So even though there is aggressive marketing and VW is picking up some market share with the Jetta, it still lags slightly in quality. 4. The American car makers still lack consistent quality. You have the Buick at 117, GMC at 116. Ford with Lincoln at 129. The Koreans with Kia at 112. 5. Chrysler is at the bottom of the list. Dodge at 134, Chevy at 136, Jeep at 137. THe lack of resources, changes in management and ownership, and the distractions of bankruptcy and dealership closings, and most of all dire lack of resources including the layoff of large parts of its engineering talent, all hurt. 6. GM sold Saab, Ford sold Land Rover and Jaguar. The neglect of Saab shows with Saab at 138, and Ford's distraction during the last 3 years shows with Jaguar at 134 and Land Rover at 150. also. 7. In summary Ford has done well overall, Toyota is coming up short in the USA and resting on its laurels, GM has a perception gap with younger buyers, Hyundai looks like a winner with both price and quality, and VW has work to do. ...

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VW's labor costs at its new plant in Chattanooga, Tennessee, will be $27 an hour in wages and benefits, according to analysts. The comparable cost for Detroit automakers and Toyota and Honda plants is $52 an hour. Over three years VW is expected to increase this to about $38 an hour, according to the Center for Automotive Research, Ann Arbor, Mich. This will enable VW to price the larger version of the Passat it will make in Tennessee at $20,000, instead of the current price of 28,000.

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VW's sales in the U.S. doubled between 2009 and 2012, and VW set aggressive goals for the U.S. market to reach 800,000 by 2018. The goal was a stretch goal because this was double the level of 438,000 vehicles in 2012. This was part of its Mach 18 plan to pass GM and Toyota in global sales by 2018. Now this goal appears less achievable, because of new models from Honda and Ford which surpass VW's Jetta and Passat in technology, features and fuel efficiency. The U.S. market sales have increased by 9.6% in 2013, VW's sales declined by 1.3% so far through August in 2013, at 282, 913 vehicles. Ramping up production at the new Chattanooga plant will have to be put off and 500 contract workers have been given leave from the assembly line. By contrast Toyota sales for the 8 month period 2013 increased by 7% and 8.6%. In August Toyota's were up 23%, Honda's 27%, and VW down 1.6%. VW executives have said the company needs sales of 400,000 to make the U.S. manufacturing operations profitable. VW made a strategic decision to cut costs and bring the Passat price more in line with competition from similiar cars from Japanese carmakers. But this was done not relying solely on productivity and other improvements, but used cost cutting using cheaper materials. VW even went one step further by taking away the European suspension which delivered a more precise ride, and installed a lower cost suspension on the Jetta and Passat. Customers have noticed with some buying older models with the European suspension. Honda and Toyota moved in the other direction in the last 2 years coming out with more advanced features on the Accord and Camry. Ford did this with the Fusion. The new Accord has a backup camera, iPod connection, power seats and alloy wheels as standard. As a result Passat sales were up only 3% through Aug 2013, and Accord sales increased by 17%, Ford Fusion sales up 13%. VW's response is to ramp up discounts. It is also coming up with a new engine, Jetta compact with a sportier ride will be introduced, and a redesigned Golf hatchback for 2014. The slowdown in sales at VW shows how competitive the car market has become with Korean, German, Japanese and American carmakers quick to make inroads in turn with weak points of the competition. Strategic missteps can be costly for any manufacturer and the customer can never be taken for granted....

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Is there a lesson in this for the Detroit automakers who have too many dealerships. See related article on the dealership numbers for the Big Three vs. the like of Toyota and Honda. Deere has gone from 3400 dealerships to 2984 dealerships, down 12% in ten years since 1996, so it appears to be a gradual decline, and dealerships are consolidating with stronger partners, or selling out to stronger partners. The number of owners has shrunk at a much faster pace. (Why are auto dealerships able to take this to the courts and not Deere dealerships, as is mentioned in the related auto dealership article? ) Much of this reflects search for improved profitability and stability in a very cyclical industry. Fewer distribution outlets owners and better management of inventory, better parts service with better techically trained staff, and bringing new technology and designs to improve the revenue generating capacity of each machine by reducing demand for expensive labor, is a shrewd way of managing this business. A $100 million dealer organization can better service what is becoming a high tech product, a better hire technically trained people, and better manage inventory. With this setup Deere probably can better manage production to match demand and not let inventory clutter the dealer lots for discounted clearence. ...

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Norbert Reithofer initiated changes at BMW when he took over as CEO in 2007. He reduced costs and improved margins at BMW. BMW has also benefitted from increasing demand for premium and luxury cars in 2010-2012.