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When Martin Winterkorn took over as CEO of Volkswagen, he said that Volkswagen wants to be better than Toyota, not

just in units, but in profitability, innovation, customer satisfaction, everything. Toyota was the declared enemy of VW. Toyota was bigger, made more money, had happier customers. When Winterkorn declared the lofty goal, it was shrugged off. Incoming CEOs routinely make grand announcements which nobody really takes seriously. The year was 2007, Volkswagen had just become #3 in the world. Toyota was #2, leading VW by more than 2m units sold worldwide. Towering above all was GM, with 9.3m units sold, 800,000 more than Toyota. A little after the quote above, first rumors about a “Strategy 2018” surfaced. The plan wasn’t public. I knew someone at VW who had seen (but wasn’t given) the strategy, and he confirmed that it said that Volkswagen wanted to overwhelm Toyota – in 10 years. Insiders (this reporter included) rolled their eyes and denounced the plan as the usual hubris of an incoming CEO, a suit who’d be busy collecting his pension by the time 2018 rolled around. I was wrong. According to an old in-house rule in Wolfsburg, grand announcements from the top are to be ignored for at least a year, because they are usually followed by new and different ones. “When they keep repeating the goal after a year or two, then it’s time to listen,” was the wisdom imparted on me when I did a lot of time in Wolfsburg. In early 2009, even the unions begun to listen. “All at Volkswagen agree that the targets of Strategy 2018 haven’t changed and that we will reach them,” said workers council chief Bernd Osterloh. Then, the auto world as we knew it collapsed. GM went under and re-emerged, smaller. Toyota became number 1, followed by Volkswagen. Volkswagen had the luck of, for a change, having not been in the wrong places at the wrong time: Weak in the USA, they were spared heavy losses. Strong in places like Brazil and China, where VW had invested a long, long time ago, VW profited from the growth in these markets. At home, their former nemesis Opel went through bouts of automutilation. And the “Strategy 2018” became dogma in Wolfsburg. In early January 2010, Winfried Vahland, President of Volkswagen Group China, reported that “based on our excellent performance in 2009, we are confident about achieving our objective of doubling the sales to two million vehicles, laid down in our Strategy 2018, much earlier than planned.” He received a pat on his shoulder, was relieved from his post in China and put in charge of Skoda. At Volkswagen, that counts as a promotion.

at the moment.” Volkswagen said in an announcement.) 40 percent plus in the U. Volkswagen wants to sell more than 10m cars. Yet. Who (Farrago excluded) would have thunk in 2007 that GM would go bankrupt? Who would have believed that Toyota would be in the grips of one quality scandal after the other? Suddenly Volkswagen is getting uncharacteristically gutsy. Volkswagen    Print More Reviews Share   . the VW brand gained 10 percent in Germany while the market dropped 4. because as the leader. they sold 6. “The Volkswagen Group is seeking global economic and environmental leadership in the automotive industry by 2018. VW may actually be closer to their strategic goal than people imagine. Strategy 2018. By 2018. By 2018. TTAC illustrated the report with flying pigs. they want to reach a group pretax margin of more than 8 percent of sales.1 percent more cars in 2009 than in 2008.” he said. According to Automobilwoche [sub. to 1 million a year. albeit unwillingly assisting VW in reaching its lofty goals.29m. Well. while the competition looked at double digit losses. chief Stefan Jacoby announced that by 2018.S. Volkswagen’s U. Posted in Editorials.S. Paid-in capital is supposed to bring in a profit of 16 percent. Toyota never wanted to be number one. A Paris-based analyst interviewed by Reuters is not convinced: “I’m not sure if there’s much point in a carmaker fixing objectives for 2018.) pedal-gate. in January. Toyota is actively. The general weakness of Toyota.A few days later. you are the target of everyone behind you. Germany.] Volkswagen has put the vague Strategy 2018 in hard numbers. Through a combination of perseverance and dumb luck. Supposedly. all that may have emboldened Volkswagen to do what CYAtrained managers usually are loath to do: Set bold and measurable targets. Industry Tagged as Bertel Schmitt. good sales at the home front (in January. Volkswagen doesn’t share these worries.S.3 percent. the overall good sales in 2009 (Volkswagen sold 1. Volkswagen wants to more than triple annual car sales in the U. In 2009.

”  Educator(of teachers)Dan February 3rd. But the man did look good in his uniform:http://en. LOGIN TO REPLY  Mr Carpenter February 3rd. .jpg kinda looks like my maternal grandfather. “Get your real and perceived quality improved in the public’s mind. Needless to say.. 2010 at 10:34 am Everyone laughed at the CEO of Hyundai a few years ago when he said he wanted to have quality improved and get up to #5 from #7 or #8 in worldwide sales. keep your cars sporty and European.   Previous Post "Volkswagen Guns For Number One" Next Post "What’s Wrong With This Picture: Dodging The Durango Edition"   Back to Top End of Comments 29 Comments on “Volkswagen’s Strategy 2018.” His advice was ignored. Once played old “Civilization III” as the Germans during WWII. I won. BTW I love strategy games. I don’t recall if there was a WWI sim as one of the scenarios.org/wiki/File:Alfred_Graf_von_Schliefen. With Generous Support From GM And Toyota. got the Russians to surrender. poured boat loads of tax money into R&D and had nuclear weapons and stealth bombers by 1943.. 2010 at 10:21 am Schlieffen’s dying words: “Remember to keep the right flank strong.wikipedia. and someday you may rule the world!” – that would be my words to VW.

While that remains to be seen. LOGIN TO REPLY o crc February 3rd. 2010 at 10:44 am I love VW’s and yet they simply will not make US headway without a cheaper Jetta (and NO 5 cylinder engines) and a 10 year warranty. I’ll be looking at the prior 5 years’ history in Consumer Reports before I even bother setting foot in a VW dealership to buy “my retirement car”. o hreardon February 3rd. but if Volkswagen were to offer a 4/50 or 5/60 and Audi to offer a 5/60 it may have a significant impact on sales. I sure like the looks of the new Sonata.Nobody’s laughing any more. Likewise when the CEO of Hyundai stated that the upcoming Hyundai Sonata Hybrid would be a far better car than the Prius. either. It sounds like the cheap Jetta is coming. 2010 at 11:01 am I tend to agree with the warranty thing – if Volkswagen is serious about jumpstarting sales in the United States. I would not subject myself to 10 years of returning to the VW service department. There are a significant enough number of people who get bored of cars after 3 – 4 years and want something newerfaster-better that I think the turnover would not take a serious hit. But I suspect that in 10 years when I replace my current Sonata and Legacy (both new). I suspect he wasn’t BS’ing there. o . LOGIN TO REPLY  tedward February 3rd. It doesn’t even need to be a 10/100 warranty. but the warranty is never going to happen. 2010 at 10:52 am tedward. offer a significantly better warranty than the 3/36 and scheduled maintenance. However. I agree one of the things VW needs is a longer warranty.

In my opinion VW’s greatest weakness is the long-term ownership and maintenance costs. In terms of quality and reliability these Volkswagens were much better cars than the two Chevrolets I had previously owned. I will never buy another Chevrolet. When I say my Jettas were quality cars I mean they were well made (quality) and they were trouble free (reliable). Of course I never abused my cars and I did all of the scheduled maintenance. VW attracts a lot of young buyers who drive very agressively. um. In my experience Volkswagen’s actual quality is much better than its reputation suggests. work. IMHO. And in traditional German fashion the Jetta is over-engineered and unnecessarliy complex. they are great when they work but frequently don’t. Because of how these cars are designed and made they are difficult and expensive to service. In recent years I have owned a 2003 Jetta GLS and a 2006 Jetta TDI. although they might change public perception of such. I think VW products are high quality but poor reliability. 2010 at 1:37 pm Quality and reliability are different things. o . Toyota’s recent recalls do nothing to change the data that shows they have high reliability. o Geotpf February 3rd. That is. Lowering the Jetta’s price point will mean simplifying and decontenting which could compromise the car’s German character. I would buy another VW.Joe February 3rd. 2010 at 2:14 pm @ Geotpf – I’m not sure I follow you here. Or. 2010 at 11:33 am A cheaper Jetta is a dicey proposition. The appeal of the Jetta is that it offers German engineering and German driving dynamics at an affordable price. The trick is to lower costs without sacrificing what makes the Jetta a VW. In my book quality and reliability are synonymous. o Joe February 3rd. This is one area that could be improved by the aforementioned simplification and decontenting. and considering the price of VW parts and service I would not be surprised if a lot of Volkswagens suffer from defered maintanance. A quality car is a reliable car and an unreliable car is not a quality car. to put it another way.

I have a feeling that if the next generation Jetta previewed at Detroit comes to production similar to what we saw they will be able to add another solid product to the portfolio. Also. Audi has matured and is poised for continued organic growth and Volkswagen has begun to bring in sought after product like the 2010 GTI. But something like the Saviero would be great for the occasional handyman like myself. Volkswagen at least is presenting the image of a company that can successfully execute this strategy.geozinger February 3rd. like the Saviero (sp?). Apparently it was their strategy to remain relevant in the US as their sales took a nose dive in the late 80′s early 90′s. now are both too huge. Even my old favorites the Dodge Durango and the Chevy Colorado too. something that is the same size as the original Golf/Rabbit from the 1970′s (that was featured here on this site before the Toyotathon ate our world). A friend of mine had a VW Fox (not the Audi) back in the day. It seemed to have worked. The Anorak would be great here. The past two years has seen the Volkswagen Group really start to get its shit together. The Ranger is just ancient. and for a first car. especially here in North America with VW and Audi. too. 2010 at 9:29 pm I’m guessing no one remembers the early 90′s and the 10 yr/100K mile warranty that VW had back then. but probably OK. So. I could see my teenage daughters driving something similar too. Tiguan and CC. as VW is still here. while the plan sounds like typical executive hyperbole. LOGIN TO REPLY o . it was great. Perhaps they’ve been a bit humbled by serious missteps in North America over the last ten years and more cautious after studying GM and Toyota more recently. I’m willing to give Volkswagen a bit of a pass on this one and admit that they’ve got a good chance of achieving these goals. 2010 at 10:48 am While I usually find these 5 and 10 year plans to be somewhat laughable.  hreardon February 3rd. Two things VW needs: The Polo or the Brazilian Gol or a car like it. They also appear to have gotten a lot of their most vexing quality issues under control – perhaps Karesh can provide some more input on that front? Audi in particular seems to have really turned the corner in quality since the 2007 model year. She’d like to have another one. something like the small pickups sold in Brazil. but I think it would get eaten alive by the domestics when pricing becomes the issue.

Porsche’s hubris led to its absorbtion by VW. it’s easy for me to dislike such a hubris-filled company. entitlement and carelesness. 2010 at 11:53 am Joe: Couldn’t have said it better myself. 2010 at 11:45 am Hubris may be VW’s undoing because too much pride leads to a sense of infalibility. Toyota’s hubris has led to its present p. GM rode its hubris all the way to bankruptcy and the old GM hubris is still there today. long time – whereas Schrempp was probably the all-time low for Daimler.  Dr Strangelove February 3rd. LOGIN TO REPLY  WaftableTorque February 3rd. 2010 at 11:38 am When Germans get their feces amalgamated and keep their focus it should put fear into everyone around them. Daimler’s hubris led to the Daimler-Chrysler fiasco. Sure it’s supposed to be product-product-product. It just means that I won’t be cross shopping Audi/Bentley/Bugatti/Lamborghini/Porsche/Suzuki/VW and whomever else they try to absorb.Walter February 3rd. o Robert. . 2010 at 10:53 am Whether or not they will ultimately succeed with this. Winterkorn is the best CEO at VW in a long. but some corporations just rub you the wrong way.Chuck Goolsbee February 3rd. 2010 at 11:11 am I personally have a hate-on for VW. and legal nightmare. LOGIN TO REPLY o Joe February 3rd.r.

don’t know how to maintain or grow it. 2010 at 11:41 am @ Joe McKinney. bulbs. It does say that AdBlue is included. 2010 at 11:38 am VW’s Carefree Maintenance plan is a bit confusing. but I’ve not heard anyone articulate examples of how . though.  jkross22 February 3rd. 2010 at 4:09 pm That’s one fo the key challenges for Winterkorn and his team! Risk is that if there is success in the mid-term. on their TDI models. Someone tell me if I missed something.Walter February 3rd. the progenitors will leave and their hunger and ambition will be replaced by satisfaction and hubris … It is an old story.o th009 February 3rd. I’ve heard that VW’s are overly complex. the ones who inherit it don’t often know what it took to get it to the point of success and worse. and a sustainable culture is not in place. 2010 at 1:03 pm But is Winterkorn’s (and VW’s) goal actually hubris? Or simply ambition? There is nothing wrong with ambition in my books. It appears the plan is all about getting the car checked out for no charge. Nowhere on their website does it say that oil changes are included and it specifically excludes brakes. tires. o Robert. as long as the person or company in question recognizes the challenges and obstacles in the way of achieving those goals. from the plan. LOGIN TO REPLY  jkross22 February 3rd. wiper blades. etc.

 .000 at a VW dealer.this is so. Apparantly this job is time and labor intensive because the transmission fluid has to be drained out through a very thin tube. A third example. o Bertel Schmitt February 3rd. Let alone the dang thing is buried in the fender or something like that.If your VW is equipped with the DSG transmission the 40K service will run around $350. This also helped lower insurance costs. If I recall right. It would be much easier and cheaper to replace these belts if they were not looped around this motor mount. 2010 at 1:21 pm Another example is the timing belt on the Jetta. Golf and New Beetle. One of the motor mounts is bolted to the engine through the loop of the belt. o Joe February 3rd. 2010 at 3:11 pm There used to be a department at Volkswagen Customer Service that checked new car developments for “serviceability” to avoid cases such as the above. To replace the timing belt the engine has to be supported with a hoist so this motor mount can be removed. I think its like $300 service. This same proceedure applies to the auxiliary drive belt which is usually replaced at the same time as the timing belt. A co-worker has a 2003 Passat. It would be much faster and cheaper to service the DSG if it had an old fashioned drain plug on the bottom of the transmission case. 2010 at 12:55 pm How about this one. Dealer has to change the battery due to re-coding. I’ve popped the hood on several and I don’t see anything overly complex about them. If you do it yourself the car won’t start. this department was scrapped during Winterkorn’s time as head of “Technical Development” – the guys bugged his engineers too much. This job will cost $500+ at an indepedent shop and upwards of $1. Any examples? LOGIN TO REPLY o dswilly February 3rd. because easier service – less time spent in shop – lower repair bills.

and the relative rarity of the cars . had been thought deliverable in a year. Like any good opportunist. 2010 at 11:56 am I have been a lifetime VW owner.S. Spyker-SAAB) make their beachhead and start to move inland. having purchased about 15 of their products over the past two decades. Kia. 2010 at 11:50 am Grand plans are not all made the same. While not as good as say. and getting stoned. VW’s standard warranty is 4 years/80. VW’s biggest issue (and biggest obstacle to achieving their North American sales targets) is spotty reliabilty and hit and miss dealership experiences. Chinese. VW should make hay while the sun shines on them.000 km bumper to bumper. 2010 at 4:14 pm oops! 3rd paragraph should say “gut VW’s plan by Nov.” LOGIN TO REPLY o Robert. Almost from the first.” with “And me. 1918. v. the external events will gut and lay WOB’s plan to rest by Nov. Or put simply. I have had personal horror stories when dealing with other stores.Walter February 3rd. My answer is the driving experience. 1918. Kaiser doing a runner) and by Nov. it’s like comparing: “Let the last man on the right brush the Channel with his sleeve. we look at this from a snap-shot in time. BTW. two at most. of which I’m also an owner). People ask me why I keep purchasing VWs. I’m flying in my taxi. 1914. the culture (much like BMW motorcycles. regroup and reenergize. While my local VW dealer has always treated me well.’s grand plan. 18 years is a long time … in Aug. 2018.Walter February 3rd.”  TCragg February 3rd. because once the other big-boys recoup. taking tips. in Canada. external events mounted (highpoint being the 1917 arrival of Pershing and the Marines) then the internal events (social turmoil w/in Germany. as well as the new entries (Koreans. it was all over (or not). it’s better than that offered in the USA.Robert. Indians. and the plan had been long dead.

VW may well alienate their core market. 2010 at 1:40 pm You better hope for a lot of dumb people because the smart ones don’t go back to the Service department after the warranty is over. 2010 at 12:50 pm Holy Cow. I hope VW has learned their lesson and does not try to make another Malibu in Chattanooga. 2010 at 1:45 pm CRC“You better hope for a lot of dumb people because the smart ones don’t go back to the Service department after the warranty is over” -VW better hope for a lot of Dumb people  mpresley February 3rd. Obviously I am in the minority. 2010 at 5:41 pm I’ve owned more VW/Audi than any brand. I’m going in for tech training ASAP. there is no way they have enough people to handle the service required to keep that many VW rolling LOGIN TO REPLY o crc February 3rd. I’d say that on average the Japanese cars were usually more trouble free (but not always) and usually relatively cheaper to service. But I never enjoyed owning any Japanese car. Worst VW I’ve ever owned. the VW service centers will clean up. o dswilly February 3rd. but perhaps it’s a market they think they can sacrifice to appeal to the masses. I owned a Westmoreland Rabbit.compared to their Honmaztoyundaissan competitors. LOGIN TO REPLY  dswilly February 3rd. But the brand has a reputation for being too expensive and . I think most people want to like VW. By dumbing-down the Europeaness and cheapening their North American product in a drive to increase sales.

Specifically. Another alternative would have been to withdraw from the American market altogether. but many also say the dealer experience is poor. but then developed a strategy that resulted in an excellent market position in the late 1970s. Application of the TOWS Matrix to Volkswagen Volkswagen (VW) was asuccessful company that experienced great difficulties in the early 1970s. . The wire on the throttle cut while the anti-lock brakes activated. It has not been my experience.less than trouble free. I was driving home yesterday in my Passat while listening to a Toyota news story on the radio. That being said. The TOWS Matrix shown in Figure 1 will focus on the crucial period from late 1973 to early 1975. I was not unhappy I bought the Passat. Consequently. but a similar situation prevailed in Europe at that time. For instance. the strategy was to reduce the competitive threat by developing a more flexible new product line that would accommodate the needs and desires of the car-buying public. Although in difficulties VW did not have to resort to a survival strategy because the company still had much strength. but perception will ruin them if they are not careful. The external threats and opportunities pertain mostly to the situation VW faced in the United States. Weaknesses and Threats (WT) A company with great weaknesses often has to resort to a survival strategy. At 50 mph (alone on the road) I kept my foot on the accelerator and hit the brake hard. In other words. immediately stopping the car. If VW is serious they must address these items. a more appropriate strategy was to attempt to overcome the weaknesses and develop them into strengths. VW could have seriously considered the option of a joint operation with Chrysler or American Motors. the direction was toward the strengthopportunity position (SO) in the matrix shown. Then. I doubt there is much to the Toyota story. Perception is everything.

which was congruent with its general strategy. as well as the tastes for more luxurious cars with many available options (Scirocco and the Audi line).Eventually the same company's strengths enabled VW to plan and build the assembly facility in New . of course. The result. VW used its technological capabilities not only to improve its engines (through the use of fuel injection. and its experience m production technology became evident. In order to minimize the additional costs of a multi product line. For example. Strengths and Threats (ST) One of the greatest threats to VW was the continuing appreciation of the Deutsche Mark against the dollar. To reduce the threats of competition and the effects of the unfavorable exchange rate.Weaknesses and Opportunities (WO) The growing affluence of customers has resulted in 'trading up' to more luxurious cars. but also price rises. increased fuel costs made the shipping of cars to the United States more costly. VW's tactic was to recruit managers from Detroit who were capable of establishing good union relations. VW had essentially followed a one-model policy which presented a problem when the design of the Beetle became obsolete A new model line had to be introduced to reach a wider spectrum of buyers. from October 1972 to November 1973 the mark appreciated 35 percent.The oil crisis in 19731974 not only caused a fuel shortage. The result of this effort was the Rabbit. but also to develop the very fuel-efficient Diesel engine. Similarly.Another strategy for meeting competitive pressures was to build on VW's strengths by developing a car based on advanced-design technology. successor to the Beetle). This allowed using the same parts for different models that ranged from the relatively low-priced Rabbit to the higher priced Audi line. Strengths and Opportunities (SO) In general. Japanese and American automakers obtained an increasingly larger share of the small-car market. However. Throughout this discussion VW's strengths in research. VW was forced to build an assembly plant in the United States.Another weakness at VW was the rising costs in Germany. Yet. This tactic. development. successful firms build on their strengths to take advantage of opportunities. a model with features later adopted by many other car manufacturers. enabled the company to develop a product line that met market demands for an economical car (the Rabbit. This situation favored setting up an assembly plant in the United States. To meet this threat. To overcome this weakness. was a less competitive posture. This meant higher prices for the buyer. under the leadership of Rudolf Leiding. For example. VW is no exception. a trend that has continued. in 1973 wages and salaries rose 19 per cent over the previous year. helped improve the firm’s market position. this also created some problems for VW because it had no experience in dealing with American organized labor. These strengths. for examples). engineering. the building block principle was employed in the design of the new cars.

in turn. with the possibility that Suzuki could actually manufacture a decontented version of the Up! for sale in India and other Asian markets. Pennsylvania. It is possible that . These companies urgently needed small engines for installation in their own cars and revenues from these sales improved the financial position of VW.Japan: 15 January 2010: Suzuki Completes Transfer of Shares to VW). which will see an emphasis on the joint development of sport utility vehicles (SUV) and the possibility of the two companies working together on a new A-segment model for emerging markets. provided many employment opportunities. The magazine has now published details of how the two companies will work together on model development plans. VW manufactured and sold small engines to Chrysler and American Motors. CAR magazine was one of the first news outlets to break the story that VW was looking at purchasing a stake in Suzuki. Thus. according to a report in CAR magazine.In another tactical move. Implications Outlook A report by CAR magazine has outlined the future model development collaboration plans of Volkswagen (VW) and Suzuki.Stanton. the product collaboration will enhance VW's potential product offering in Asian markets and help a comparative weakness in the area of small and medium SUVs. IHS Global Insight Perspective Significance Volkswagen (VW) and Suzuki will base their future collaborations on the joint development of sport utility vehicles (SUVs) while a decontented version of the VW Up! could also be manufactured in emerging markets. while a low-cost A-segment car also offers potential for the SEAT and Skoda brands in emerging markets. with a deal for VW to acquire a 19. The strategy outlined in the CAR magazine report would appear to be a logical way for the two companies to proceed given Suzuki's experience in small off-road vehicles and significant presence in India and Asia. although this has not been confirmed. YW could benefit from substantial concessions granted by the state government to attract VW which. Either way.9% holding the Japanese OEM completed in December last year (see Germany . The report claims that VW is likely to increase its stake in Suzuki over the next few years. 30 Jun 10 VW and Suzuki look to be moving towards finalising a new model development co-operation plan that will address weaknesses in VW's product line-up and increase savings.

Alternatively. which along with other VW Group variants could share a joint VW-Suzuki architecture based on the next generation Grand Vitara underpinnings. The CARreport also makes a bold claim that VW is planning to increase its stake in Suzuki by 10% a annually over the next four to five years. it is also possible that Suzuki could also manage a modified version of the Alto for the Skoda brand. the product plan outlined appears to make sense and would help VW enhance its economies of scale even further. while improving the company's access and product line-up in emerging markets such as China and India. It may also be possible for Suzuki to derive a new larger SUV model from either the next generation VW Tiguan SUV. but by last year sales volumes had quadrupled to 129. VW is also looking into the possibility of a compact or small crossover model. . The small and compact SUVs that VW is planning could be based on Suzuki platforms. As a result this platform architecture could end up forming the basis for the forthcoming VW CrossPolo. the MLB platform for longitudinal-engine models and the MQB platform for transversely mounted engine passenger cars. which the next generation SX4 would fit in terms of offering a suitable platform. will enhance VW's potential product offering in Asian markets and a comparative weakness in the area of small and medium SUVs. For niche and relatively low-volume models like compact SUVs it may make more sense to come up with a specific common architecture that can be used across VW brands and Suzuki for similar models. is a modern Asegment platform that could offer interesting possibilities for the VW Group in developing markets. which is known as the A-Star in the Indian market where it is manufactured by Maruti-Suzuki. although it also stated that both VW and Suzuki refused to confirm this assertion. This would certainly go against comments made by Osamu Suzuki at the time of the announcement of the initial stake purchase in VW (seeJapan: 21 January 2010: CEO Says Suzuki Will Resist Any Attempts by VW to Take Bigger Stake) but adding Suzuki's sales volumes would go a long way towards achieving the VW Group's stated ambition as part of its strategy 2018 programme of overtaking Toyota to become the world's biggest carmaker by 2018. According toCAR.this model could be badged as a Skoda. Outlook and Implications While there is obviously a tone of informed speculation to the CAR report. A move towards VW and Suzuki working together on joint architecture based on either the next generation Suzuki SX4 or Grand Vitara is a move away from VW's basic strategy of creating nearly all its mainstream model offerings off two basic platforms. any strategy would have to be implemented so as not to result in significant conquest sales in Suzuki's traditional markets. VW could also build a larger Passat-sized crossover. which would give the company a price-competitive offering in China. The seventh generation Alto. the future product plan for the VW Group allows for five separate SUV designs. or the Audi Q5. The strategy outlined by CAR. while a low cost A-segment car also offers potential for the SEAT and Skoda brands in emerging markets.000 units. if indeed implemented. According to the CAR report. However. as the VW Group's value-orientated brand already has a significant presence in India and has been enjoying extensive strong sales growth in China. a new small Audi SUV (Q1) and equivalent SEAT (Tribu) and Skoda models (Yeti II). with the replacement for the current Vitara and SX4 the obvious choice to provide the engineering underpinnings for these vehicles. However. which are based on differing architecture despite their similar size. perhaps the biggest component of any future model development programme between VW and Suzuki will come in the field of medium and small SUVs. The VW Group only officially launched the Skoda brand in 2007. India and other Asian markets.

India and other Asian markets. will enhance VW's potential product offering in Asian markets and a comparative weakness in the area of small and medium SUVs. although it also stated that both VW and Suzuki refused to confirm this assertion. the MLB platform for longitudinal-engine models and the MQB platform for transversely mounted engine passenger cars. It may also be possible for Suzuki to derive a new larger SUV model from either the next generation VW Tiguan SUV. Outlook and Implications While there is obviously a tone of informed speculation to the CAR report.and Suzuki. VW could also build a larger Passat-sized crossover. which are based on differing architecture despite their similar size. The seventh generation Alto.000 units. is a modern Asegment platform that could offer interesting possibilities for the VW Group in developing markets.Japan: 15 January 2010: Suzuki Completes Transfer of Shares to VW). A move towards VW and Suzuki working together on joint architecture based on either the next generation Suzuki SX4 or Grand Vitara is a move away from VW's basic strategy of creating nearly all its mainstream model offerings off two basic platforms. as the VW Group's value-orientated brand already has a significant presence in India and has been enjoying extensive strong sales growth in China. a new small Audi SUV (Q1) and equivalent SEAT (Tribu) and Skoda models (Yeti II). perhaps the biggest component of any future model development programme between VW and Suzuki will come in the field of medium and small SUVs. . while a low cost A-segment car also offers potential for the SEAT and Skoda brands in emerging markets. It is possible that this model could be badged as a Skoda. The small and compact SUVs that VW is planning could be based on Suzuki platforms. the product plan outlined appears to make sense and would help VW enhance its economies of scale even further. which will see an emphasis on the joint development of sport utility vehicles (SUV) and the possibility of the two companies working together on a new A-segment model for emerging markets. if indeed implemented. The strategy outlined by CAR. which the next generation SX4 would fit in terms of offering a suitable platform. Alternatively. The VW Group only officially launched the Skoda brand in 2007. According toCAR. VW is also looking into the possibility of a compact or small crossover model. The CARreport also makes a bold claim that VW is planning to increase its stake in Suzuki by 10% a annually over the next four to five years. However. which along with other VW Group variants could share a joint VW-Suzuki architecture based on the next generation Grand Vitara underpinnings. while improving the company's access and product line-up in emerging markets such as China and India. According to the CAR report. with a deal for VW to acquire a 19. any strategy would have to be implemented so as not to result in significant conquest sales in Suzuki's traditional markets. However. or the Audi Q5. the future product plan for the VW Group allows for five separate SUV designs. As a result this platform architecture could end up forming the basis for the forthcoming VW CrossPolo. CAR magazine was one of the first news outlets to break the story that VW was looking at purchasing a stake in Suzuki. which would give the company a price-competitive offering in China. This would certainly go against comments made by Osamu Suzuki at the time of the announcement of the initial stake purchase in VW (seeJapan: 21 January 2010: CEO Says Suzuki Will Resist Any Attempts by VW to Take Bigger Stake) but adding Suzuki's sales volumes would go a long way towards achieving the VW Group's stated ambition as part of its strategy 2018 programme of overtaking Toyota to become the world's biggest carmaker by 2018. which is known as the A-Star in the Indian market where it is manufactured by Maruti-Suzuki. For niche and relatively low-volume models like compact SUVs it may make more sense to come up with a specific common architecture that can be used across VW brands and Suzuki for similar models. but by last year sales volumes had quadrupled to 129. The magazine has now published details of how the two companies will work together on model development plans. with the replacement for the current Vitara and SX4 the obvious choice to provide the engineering underpinnings for these vehicles. with the possibility that Suzuki could actually manufacture a decontented version of the Up! for sale in India and other Asian markets. it is also possible that Suzuki could also manage a modified version of the Alto for the Skoda brand.9% holding the Japanese OEM completed in December last year (see Germany .