Volkswagen, already in deep trouble in the United States, is expected to have a drop in June sales of 15.8%, which is another sign that its recovery is improbable.
According to research firm Edmunds, VW’s unit sales are expected to drop from 50,663 in June 2013 to 42,674. The drop will be larger than that of any other major car company. Industry sales are expected to fall 3.1% for the same period to 1,358,683. Based on these numbers, VW’s market share could drop to 3%, which is approximately half of that of Japan’s number three car company, Nissan. By way of contrast, market leader General Motors Co. (NYSE: GM) is forecast to have a market share of 17.8%
VW’s problems in the United States are well cataloged and are the primary reason its goal of becoming the world’s top car company is threatened. In the recently released J.D. Power 2014 U.S. Initial Quality Study, VW ranked well below average with 128 problems per hundred cars. The industry average was 116. Market leader Porsche had a score of 74, which is ironic because VW has owned Porsche since 2012.
VW has held an impressive position in Europe and has for years. According to the ACEA, VW sold 290,119 cars in the European Union in May, up 9.6%. Its market share was 26.5%, much larger than GM’s in its home market. GM’s sales in Europe in May were only 81,754, down 6.8%, which gave it a market share of 7.5%.
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VW has done nearly as well in China, the world’s largest car market. According to the China Association of Automobile Manufacturers, VW leads the market in the People’s Republic with a share of more than 11%. GM’s joint venture, SAIC-GM-Wuling, was second.
With all of VW’s success around the world, its failure in the United States stands out. Some experts believe that VW has not introduced enough new models in America to capture the attention of consumers. Others think the VW model line-up is not even close to broad enough when compared to GM, Ford Motor Co. (NYSE F) and Toyota Motor Corp. (NYSE: TM). Volkswagen may be trying hard in America, but it will have to try much harder.
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