published Sunday, December 18th, 2011

VW's and Chattanooga's rising fortunes

While German carmaker Volks-wagen has long been a successful company, who would have imagined even as recently as a few years ago that it would be in a position to challenge the “big boys” as the leading automaker in the world?

Volkswagen, that’s who!

It was five years ago that Volkswagen set its sights on becoming the biggest carmaker in the world — by 2018. But now, years ahead of that timetable, Volkswagen may be poised to seize the No. 1 spot from General Motors, the dominant player in the industry for decades.

En route to that goal, Volkswagen’s sales have already surpassed those of big Japanese manufacturer Toyota. Japan’s economy has been in dire circumstances for years, and it is suffering lingering ill effects of the earthquake and tsunami that struck there early this year.

GM, meanwhile, is still recovering from bankruptcy.

But by no means is Volkswagen’s rising market share only the product of misfortune or poor management decisions at other car companies. VW has been laying the groundwork for expansion and sales growth for years.

Locally, of course, that is most evident in the billion-dollar manufacturing plant that VW has built at Enterprise South industrial park — a plant that is humming along these days, producing hundreds of cars daily. More than 2,500 local employees are building those cars, earning good wages that circulate in the Chattanooga economy.

But our massive VW plant is far from the full extent of Volkswagen’s investment in its future.

Volkswagen recently stated that it plans to invest $86 billion over the next five years in everything from plants to vehicles to research and development. That’s an incredible sum. And it will surely build on VW’s current successes, which include the possibility that Volks-wagen this year will become the biggest-selling car brand in the world.

Through the first three quarters of 2011, VW reported sales of 6.2 million vehicles worldwide. That put it ahead of No. 3 Toyota’s 5.8 million car sales but still behind GM’s 6.8 million.

But analysts see VW closing the gap fast.

“The real question is, who’s got the momentum,” Jeremy Anwyl, president of Edmunds.com, told The New York Times. “It’s Volkswagen. Volkswagen has been putting into place building blocks for growth.”

We saw a bit of that momentum in the recent naming of the Chattanooga-built VW Passat as Motor Trend magazine’s Car of the Year.

VW has also had higher earnings than Toyota or GM through the first nine months of 2011.

Still, it won’t be a cakewalk to the No. 1 spot, even for a successful company such as Volkswagen. GM and Toyota have no intention of rolling over and surrendering their market share without a fight.

At any rate, the competition among automakers and the desire to attract customers should enhance the quality of the vehicles built. And VW’s advancement in particular is of enormous benefit and encouragement to us in Chattanooga and the surrounding region.

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