Troubling times at VW

[SRGTD]

The article at the link below was posted on the Golf GTI forum a few days ago by forum member @fredgroves on that forum;

https://www.theguardian.com/business/ar ... or-germany

[OomStu_ZA]

Sad but a sign of the times. VW are also not blameless here either and they've shot themselves in the foot too. Dieselgate hurt them big time and then in China things are not going VW's way with China now also manufacturing and selling EV's a lot cheaper than VW. The China deal is another topic all together but lets leave that for another time. Here in South Africa VW will still manufacture the Polo until around the 2030 mark and will also be introducing a "cheap" SUV to fall in under the T-Cross (around 2027). This new SUV model will eventually replace the Polo Vivo which is basically the old 6C gen vehicle being sold as a cheaper Polo.

[SRGTD]

I agree, it is a sign of the times.

I’ve always been of the opinion that VW are a little arrogant, and because of their size, they’ve considered themselves to be invincible. With this in mind, they may not have been keeping a close enough watch on competitor activity or on changing customer behaviour. Additionally, the larger the organisation, the more difficult it is to react quickly to changing market conditions; a bit like a large ocean going liner trying to change course to avoid an iceberg - and we all know what happened to the Titanic.

On the subject of changing customer behaviour and buying habits - when I passed my driving test back in the 1970’s, my primary objective was to get a car. That no longer seems to be a priority for many youngsters in their late teens / early 20’s, so certain market segments are likely to be shrinking or disappearing. Additionally, with greater focus on the environment and also changing work habits with many people working from home, I dare say car usage and car ownership will have been in decline. That all translates into lower demand for VW’s - and other car manufacturers - products. When that happens, it’s inevitable changes need to be made and companies need to become leaner and more cost efficient, otherwise they may cease to exist.

Challenging times ahead……………..

[OomStu_ZA]

I just read this article (in German) and seems VW are increasing prices, again:

https://www.autobild.de/artikel/vw-reag ... 34929.html

The only exception is the base Polo model.

[SRGTD]

I just read this article (in German) and seems VW are increasing prices, again:

https://www.autobild.de/artikel/vw-reag ... 34929.html

The only exception is the base Polo model.

Seems a strange move; increasing prices is likely to result in fewer sales. However, VW’s bean counters will no doubt have ‘crunched the numbers’ and maybe they’re banking on increased prices driving an increased profit margin per vehicle sold. If so, then even with fewer sales, overall profits could increase.

However, reduced sales would mean scaling back vehicle production, requiring fewer staff and smaller or fewer production facilities, otherwise the potential increase profit margin per vehicle would get eaten up by the cost of keeping under-utilised factories and too large a workforce.

It’ll be interesting to see how VW’s current predicament develops…………

[OomStu_ZA]

Some fresh information arrived in the news today about the new SUV on the cards for South Africa:

https://www.cars.co.za/motoring-news/is ... uv/246468/

Apparently this model (designed in Brazil) will be assembled alongside the Polo and Polo Vivo in the Eastern Cape around 2027 for local sales.

[Ian T]

I agree, it is a sign of the times.

I’ve always been of the opinion that VW are a little arrogant, and because of their size, they’ve considered themselves to be invincible. With this in mind, they may not have been keeping a close enough watch on competitor activity or on changing customer behaviour. Additionally, the larger the organisation, the more difficult it is to react quickly to changing market conditions; a bit like a large ocean going liner trying to change course to avoid an iceberg - and we all know what happened to the Titanic.

On the subject of changing customer behaviour and buying habits - when I passed my driving test back in the 1970’s, my primary objective was to get a car. That no longer seems to be a priority for many youngsters in their late teens / early 20’s, so certain market segments are likely to be shrinking or disappearing. Additionally, with greater focus on the environment and also changing work habits with many people working from home, I dare say car usage and car ownership will have been in decline. That all translates into lower demand for VW’s - and other car manufacturers - products. When that happens, it’s inevitable changes need to be made and companies need to become leaner and more cost efficient, otherwise they may cease to exist.

Challenging times ahead……………..

A good few years back Toyota's mantra was to become the worlds biggest and as a result forgot their heritage and values. They did briefly become the biggest and it did them no good at all

[spartacus68]

Late to the party with this. I sold my daily driver diesel Polo last year, cashing in my chips so to speak. I’ve stayed with VAG group for my sins and ploughed the money into a 7 year old diesel 3.0 litre Audi, but it will likely be my last, which suits me as I’m due to retire in 3 years.

Anyway my take on it. I agree VAG group are arrogant. Dieselgate hurt them, but not as much as it could. If you remember what happened in the US, then the company effectively bought the cars back. Not so in Europe, and VW fought it tooth and nail. Customers in the UK had to rely on class action litigation via ambulance chasing law firms to get any sort of recompense. I remember taking my Skoda Fabia in to be altered and I got a free umbrella. My old diesel Allroad, I got a care kit. Both cost a few pounds.

I also think VAG have taken their eye off the ball with customers. The uptake of electric hasn’t been as quick as they expected and the Chinese and Koreans have seized the opportunity with their technical developments and marketing. VAG are stuck in the stone age with 3 year manufacturer warranties. If you are paying in excess of £40-50k on an electric vehicle, and even more, then 3 years is nothing, and paying to in effect add additional warranty years doesn’t sit well with customers when you can get 7 years or 100k miles from Kia, regardless of owners as long it’s been serviced to manufacturer standards.

LEZ zones in cities phased out non compliant engines such as Euro 5 diesel, however that’s not the main issue. Younger people struggle to afford a car, and even if they could buy it, where do they park it? Insurance costs have risen for experienced drivers, never mind those that have just passed their test. Wage stagnation hasn’t helped, but property prices including escalating rents and the inaccessibility of mortgages except for those that can afford the increased deposits has refocused the minds of younger generation and their priorities, so in a way VAG are missing out on millennials.

VAG have to reinvent themselves. I also think the dealer franchise model is seriously flawed. I have lost count of the poor service I’ve received over the years at astronomical labour rates (for basic technician service) which focussed me to be independent and to be spanner handy, working across combustion engine or electric. Wife has BMW i3 REx.