A model dressed as a crash-test dummy sits in front of a Volkswagen Lupo at the international car show "IAA" in Frankfurt, Sept. 17, 2009. VW says sales in China rose 37 percent from a year ago, to just over 1 million vehicles. (Kai Pfaffenbach/Reuters)

Interview: Volkswagen CFO Hans Dieter Poetsch

Share on Facebook StumbleUpon Add to Reddit Print Version Email Article

Can VW conquer America with "Das Auto?"

By Karoline Durr — Special to GlobalPost

Published: October 18, 2009 08:35 ET

BERLIN, Germany — After the near collapse of the auto industry over the past 12 months, car companies are beginning to shake off the global crisis.

Volkswagen is certainly charging ahead, particularly in China, the world's fastest-growing market (and now the world's largest). VW says sales in China rose 37 percent from a year ago, to just over 1 million vehicles.

Now, after taking over Porsche this summer, the German giant is pushing to remake itself in the U.S., too.

GlobalPost recently interviewed Hans Dieter Poetsch, Volkswagen's chief financial officer.

What is the game plan for VW in the U.S. market?

For achieving our goal of becoming the No. 1 brand globally, it is important that we focus on becoming stronger in the U.S. We have a clear plan based on five pillars and are moving forward on them. These pillars are: dealers, products, brand, local production and organization. We are working closely with our dealers, we have attractive new products, our brand image under the “Das Auto” campaign is strong and our Chattanooga (Tennessee) plant is under construction, with start of production slated for 2011. Additionally, we have reorganized our corporate structure and moved our North American corporate headquarters to Virginia (from Detroit). All in all, we are well prepared to return to our former strength in the U.S. Our goal is to increase group sales from currently less than 300,000 units to half a million vehicles in the U.S. in the coming years.

Car sales in Europe are expected to fall further in 2010, especially in Germany. So which markets are you counting on?

We will continue to see cautious development in Europe over the coming months, in light of discontinued government car purchase incentive programs. We have to prepare for that situation. We are, however, benefiting from a very positive development in China, where the car market is booming and Volkswagen is excellently positioned. Our business in South America is also performing well, and the crisis-ridden Russian market is expected to recover soon. And we see good growth opportunities in the U.S. Overall, the current environment shows once again just how important and meaningful a global presence is for a company like Volkswagen.

Your company just bought Porsche — making it VW’s 10th brand. How does this make strategic and financial sense?

We are convinced that forming an integrated group with Porsche follows a compelling industrial logic: It will allow Volkswagen to further extend its position as the world’s leading multi-brand automotive group. The integrated group will command a leading position in terms of global market presence, segment coverage, technology and innovation, global purchasing power and manufacturing base. It offers attractive growth prospects thanks to its superior modular systems, solid financial position, effective management and excellent employees. With Porsche, Volkswagen is further expanding its position particularly in the premium sector.

It will also be financially attractive. Porsche AG is a highly profitable car maker with outstanding growth opportunities. In a medium- to long-term context, the integration of Porsche will have a positive effect on the group’s earnings. As a result of synergies, we expect an annual rise in our operating profit of roughly 700 million euros ($1 billion) in the long term.

How will having Porsche help VW position itself during the crisis and into the future?

We have been able to gain market share in key markets during the crisis and to further improve our position on our way to becoming the number one car maker in the world. We were also successful in preserving our financial strength despite the adverse environment.

Joining forces with Porsche will make both companies even stronger. Porsche AG is highly profitable and has a good chance of growing into a new dimension in the coming years, with regard to both sales and earnings. Volkswagen will benefit from the expected synergies as well as the perfect fit of Porsche into our multi-brand strategy. And finally, we will be able to safeguard Volkswagen’s solid financial position and strong rating at any stage of the integration process. The transaction therefore does not mean that Volkswagen will be taking a back seat in the further consolidation of the automotive sector in the coming years. We will keep on playing an active role.

You want to take over from Toyota as the world’s biggest automaker. When and how will this happen?

We want to achieve global leadership in the automotive sector by 2018. This remains a core element of our strategy. It is essential that the entire group works hard to achieve this goal. With Porsche we are making a large step in that direction. Our central success factor is the multi-brand strategy. No other car manufacturer is positioned as broadly as Volkswagen. The fact that our brands can work so independently while still using all synergies of the group makes them strong. We will use this strength even more intensively via our group-wide modular systems. We will broaden our model range on this foundation, especially in terms of reduced consumption and alternative technologies.