Tag Archive | "sport-utility vehicles"

VW Considering Tripling SUV Lineup to Overtake Toyota


Volkswagen AG is considering tripling the namesake VW brand’s sport-utility vehicle lineup in a bid to overtake Toyota Motor Corp. in global deliveries, two people familiar with the matter said, according to The Detroit News.

The VW marque will offer as many as six SUVs in the coming years, expanding from the midsize Touareg and compact Tiguan currently on sale, said the people, who asked not to be identified in advance of an official announcement.

Demand for SUVs is growing, with the models likely to account for 20.1 percent of global production by 2018 compared with 17.6 percent in 2012, according to consulting company PwC. The VW nameplate’s focus on traditional cars, such as the Golf hatchback and Passat sedan, has in particular held back the brand in the U.S., where rivals have wider SUV offerings.

“The SUV segment is still growing globally, and it’s a key segment for all manufacturers,” Roman Mathyssek, a Munich-based analyst at Strategy Engineers GmbH consulting company, said by phone. “The VW brand still has growth potential in SUVs, which could especially help them to build a stronger position in the U.S. and in emerging markets.”

The $23,305 Tiguan will be updated as a lighter vehicle in 2015 to help lower fuel consumption, and VW is also developing a coupe version and longer variant of the model, the people said. VW may also offer a subcompact crossover, which has characteristics of an SUV and traditional car, choosing between the boxier Taigun and coupe-like T-Roc prototypes displayed at recent auto shows, the people said.

In addition, VW plans to build a midsized SUV based on the CrossBlue concept that is scheduled to go on sale in the U.S. in 2016. VW has yet to choose the model’s production site pending a cost review that includes potential incentives from governments in Mexico and Tennessee, one person said.

Rounding out VW’s offerings in the segment is the $44,570 Touareg, the brand’s first and largest SUV. Officials at Wolfsburg, Germany-based Volkswagen, the world’s second-largest automaker, declined to comment on the manufacturer’s SUV plans.

VW has a target of beating Toyota in annual deliveries by 2018. The new models would let VW challenge more of the Japanese manufacturer’s seven-model SUV lineup that ranges from the $23,550 RAV4 to the $79,605 Land Cruiser. Detroit-based General Motors Co., which VW passed in global sales last year, offers 14 SUVs, from the $24,160 Buick Encore to the $65,380 GMC Yukon XL Denali. The figures don’t include SUV offerings from Toyota’s upscale Lexus brand or GM’s premium Cadillac.

“Japanese manufacturers were very early to realize the potential of on-road SUVs and developed differentiated products to complement their passenger-car offerings before most European peers,” said Christoph Stuermer, lead analyst for PwC’s Autofacts forecasting service. “A growing number of planned coupe-style variants will add to the dynamic of the trend toward SUVs and crossovers.”

The moves mirror a broader push into SUVs underway at VW’s premium brands. Porsche began delivering the Macan compact SUV in Germany in April. The model, priced at 57,930 euros ($78,800) in Europe and $49,900 in the U.S., and the larger Cayenne are likely to bring SUV deliveries to 64 percent of Porsche’s total sales by next year, with its traditional sports cars such as the 911 accounting for 24 percent, according to consulting company IHS Automotive.

Audi offers three SUVs and will introduce a fourth, the subcompact Q1, in 2016. Volkswagen’s high-end brand Bentley plans to bring out the world’s most expensive SUV that year. VW’s Lamborghini performance-car unit is considering introducing an SUV in 2017.

SUVs typically are more profitable than cars. The models being considered would be targeted at helping the VW brand approach a goal for operating profit to exceed 6 percent of sales, compared with a margin of 2.9 percent earned last year.

Chief Financial Officer Hans Dieter Poetsch said at the annual shareholders meeting last month that earnings at the VW brand should improve over the course of 2014, after the cost of rolling out modular manufacturing technology weighed on earnings in recent quarters. The production process is designed to enable VW to develop and build new models and variants at a lower cost by sharing larger sets of components.

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Volkswagen Reports Record 2011 Profit on SUV Sales


Volkswagen AG, Europe’s largest automaker, reported record 2011 profit as demand increased for Audi and VW sport-utility vehicles.

Earnings before interest and taxes advanced 58 percent to 11.3 billion euros ($15.1 billion), the Wolfsburg, Germany-based carmaker said in a statement today. Profit matched the 11.3 billion-euro average estimate of 22 analysts surveyed by Bloomberg. Revenue gained 26 percent to 159 billion euros.

Chief Executive Officer Martin Winterkorn is adding factories in a bid to surpass General Motors Co. as the world’s biggest carmaker. VW, which delivered a record 8.27 million vehicles in 2011, aims for sales growth this year outpacing the market’s expansion. The German company has expanded production of SUVs such as the VW Tiguan and Audi Q5 to meet high demand in the U.S. and China, its largest market.

“There’s not a real positive surprise, so there might be some disappointment,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. “The quality of the earnings is probably better, but more explanation is needed.”

The stock rose 10 cents, or 0.1 percent, to 139.25 euros in Frankfurt trading today. The shares have gained 20 percent this year, valuing the carmaker at 61 billion euros.

Volkswagen raised the dividend for 2011 by 35 percent to 3.06 euros per preferred share from 2.26 euros a year earlier. The dividend per common share for last year will be 3 euros. The carmaker will release more details on 2011 earnings on March 12.

Future growth may also come from pending mergers. VW is exploring options to combine with majority shareholder Porsche SE after scrapping plans last year for a merger because of legal tangles.

To avoid further delays, VW may drop the full merger and instead buy Porsche’s carmaking business, two people with direct knowledge of the situation said in November. VW already owns 49.9 percent of Porsche’s automaking business and holds an option to purchase the remaining 50.1 percent.

Volkswagen’s 2011 net income was lifted by a gain from the revaluation of the Porsche options. The figure more than doubled to 15.4 billion euros from 7.23 billion euros.

VW last year took a majority stake in German truckmaker MAN SE, raising its holding to 55.9 percent. VW has been seeking closer links between MAN and Soedertaelje, Sweden-based Scania AB, which it also controls, with a goal of forging a three-way truckmaking alliance. Such a tie-up may save as much as 1 billion euros in annual costs, VW has said.

VW’s net liquidity in 2011 dropped 8.6 percent to 17 billion euros because of 7 billion euros in spending on equity investments, including the increase in the MAN stake.

“VW generated a negative cash flow in the fourth quarter,” Michael Punzet, a DZ Bank analyst who recommends buying the shares, said in a note to investors. “In our view, this is mainly related to production cuts at year end and some investments at plants” for a new underbody that will be used as the basis for several vehicles.

Investments in property, plants and equipment in 2011 rose 40 percent to 7.93 billion euros, VW said today.

The maker of the Golf hatchback, VW’s best-selling vehicle, plans to spend a record 62.4 billion euros over the next five years on plants, models, research and development to underpin its global expansion. VW wants to hire more than 50,000 workers through 2018 as it targets more than 10 million autos per year.

Daimler AG this month forecast that operating profit this year will be “in the magnitude” of 2011’s 8.98 billion euros. CEO Dieter Zetsche has vowed to retake the luxury-car lead from Bayerische Motoren Werke AG after slipping last year to third behind Audi. Daimler predicts industrywide auto deliveries will rise 4 percent globally this year.

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