Frankfurt - Volkswagen dethroned Toyota Motor last year
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.
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 and Daihatsu Motor 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 US 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.
Threat looms
Toyota’s sales last year lagged behind Volkswagen mainly
due to its performance in the US and China, with demand for its flagship Camry
sedan waning in the US and sales in China expanding at a slower pace than the
overall market. Looking ahead, Toyota must contend with possible trade tensions
as US President Donald Trump pressures foreign automakers to make more cars and
trucks in the US.
“The development of the US market is set to decide if VW
can stay ahead of Toyota this year,” Sascha Gommel, a Frankfurt-based analyst
at Commerzbank, said by phone. “If the Chinese and European markets continue to
be solid and the US market weakens as I expect, VW might stay first in 2017 as
Toyota has a larger exposure to North America.”
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Since his inauguration, Trump has withdrawn the US from
the Trans-Pacific Partnership trade accord, reaffirmed a campaign promise to
renegotiate the North American Free Trade Agreement involving Mexico and met
with automakers to persuade them to keep production within the US.
Toyota will invest $10 billion in the US 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 US
hundreds of thousands of cars from what he said were “the biggest ships I’ve
ever seen.”
VW restructuring
“Trump is a bigger risk for Toyota than for Volkswagen
because the German carmaker has a small exposure to the US market,” said Ken
Miyao, an analyst at Tokyo-based market researcher Carnorama. “Toyota has made
investment to build a new plant in Mexico and will have limited options to
appeal to Trump.”
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 US comeback push, it’s
rolling out the Atlas mid-size SUV and smaller Tiguan crossover with a longer
wheelbase.
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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.
VW executives have become tight-lipped about sales-volume
targets as the company’s focus shifts toward safeguarding profits and preparing
for a future where vehicle ownership becomes less relevant as ride-hailing and
car-sharing gain in popularity.
“Our new strategy through 2025 doesn’t include any sales
targets anymore,” Dietmar Voggenreiter, sales chief at VW’s premium-car unit
Audi said in an interview this month. “These times are over.”