Warc Blog

Volkswagen looks to emerging markets

18 March 2013
WOLFSBURG: Volkswagen, the automaker, expects to yield most of its future growth in emerging markets, and is thus looking to build low-cost cars and a more international management team.

Chief executive officer Martin Winterkorn, speaking at the company's annual accounts press conference, said the Volkswagen group already sold 60% of its vehicles outside Europe.

And he stated that "Volkswagen's future is increasingly being decided in China, Russia, India, the Americas and Southeast Asia.

"This is where we will generate most of our future growth," he said. "This is where we have to attract new customers, and this is where we have to take full advantage of the potential that lies in our brands."

Winterkorn went on to outline the three ways in which the carmaker is approaching this challenge: offering more regionally-tailored models; expanding the firm's global production network; and making the Volkswagen team more international.

Initially, China will be the focus of much attention, with ŠKODA set to launch a local version of its Rapid model. Audi has also opened a dedicated R&D centre in Beijing, while VW is working on a "dynamic coupé in the A segment" targeted at the growing number of young, wealthy Chinese drivers.

While premium brands account for half the group's profits, it also intends to grasp the opportunities available in the fast-growing market for entry-level mobility, and is thus aiming to launch a "true budget car" in the Asian nation, priced at €6,000-7,000.

The Volkswagen group already operates 12 manufacturing plants in China and plans to open a further seven in coming years. By 2018, it will have the capacity to produce 4m vehicles a year in China.

Winterkorn noted that over the past five years, Volkswagen had added 140,000 employees outside Germany, and said that as a result that it "has become a bit more Chinese, American, Russian and Brazilian". He expected this diversity of cultures would help make the company more creative and powerful.

Data sourced from Seeking Alpha; additional content by Warc staff

 
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