With a continuing shortage of components and logistics problems, the year 2021 might have been terrible for established car manufacturers from the West – but it didn’t, because despite falling quantities, sales mostly remained stable and profits sometimes even increased significantly. Due to a lack of available parts, the industry relied on high margins with more expensive models and canceled discounts. And this principle, born out of necessity, has a future, as statements by the CFO of the VW Group make clear.
VW now wants margin instead of market share
Tesla grows and grows, and several young and older Chinese companies are doing the same with electric cars. If the car market doesn’t grow much larger overall, it will inevitably be at the expense of the established manufacturers in the long run. And that’s exactly what they seem to be preparing for, while announcing rows of double-digit billion investments in their own electric cars. Mercedes-Benz already declared in October 2020 that wanting to return to the lucrative luxury segmentBMW boss Oliver Zipse emphasized at the end of 2021 that they were by no means relying on a volume strategy.
Those were new tones, but 2021 has shown it can work, and now they’re also coming from Volkswagen as a traditional mass manufacturer. In the conversion to the Tesla model, he does not want to go back to his roots, but rather leave them behind for good: “We are more interested in quality and margins than in volume and market share,” said Arno Antlitz, the group’s CFO with brands from Skoda to Bentley, this week der Financial Times.
Specifically, according to Antlitz, the range of cars with petrol or diesel engines in the VW brands is to be significantly reduced within the next eight years: in Europe by 60 percent of the currently at least 100 models. But this does not necessarily have to be offset by a corresponding increase in electric cars: Fixed costs at Volkswagen have been significantly reduced, which is why the group is less dependent on volume and growth, said the CFO. Overall, Volkswagen is not building any additional production capacity, just gradually converting old ones.
Only Asia and Tesla in the volume race
So Volkswagen seems to have dropped out of the race for global market leadership. The German group briefly held this title, introduced as a target by former CEO Martin Winterkorn, until it was returned to Toyota in 2020. The Japanese company, meanwhile, shows less inclination to change strategy. On the contrary, resigned Toyota will make a determined entry at the end of 2021 with 30 purely electric cars by 2030 and, according to rumors, is planning an affordable model with batteries from BYD from China this year.
to be added fast-growing electric car manufacturers from the country like BYD itself. In the future, Asian companies might therefore decide among themselves the top of the global volume market, while Western companies must hope that this does not also cost them premium shares. And on top of everything, of course, there is Tesla, which according to current statements by CEO Elon Musk might sell 20 million electric cars in ten years – regarding twice as many as VW brought to the public in its most voluminous times of conventional vehicles.