There is safety in sales numbers, and as it becomes more and more costly to turn a profit in the car industry, we’ll continue to see brands consolidate under immense corporate umbrellas, such as Chrysler’s marriage to Fiat. But while some fight to survive, others fight to rule. Today, Toyota and Volkswagen dominate as the world’s largest automakers. But economic crises, natural disasters, and recall hysteria can change fortunes rapidly. What follows is a look at the present positions of these two colossi.
| Toyota | Volkswagen | |||
| 2012 Global Sales/Rank | 9.75 million/1st | 9.09 million/3rd | ||
| 2013 Global Sales/Rank | 9.98 million/1st | 9.73 million/2nd | ||
| 2013 Sales/Rank in the U.S. | 2,236,042/3rd | 611,512/8th | ||
| Brands | Toyota, Daihatsu, Lexus, Hino, Scion | Volkswagen, Audi, Škoda, VW, Commercial, Seat, Porsche, Man, Scania, Bentley, Lamborghini, Bugatti (and Ducati) | ||
| 2013 Global Bestselling Models | Corolla, approximately 1,245,000 sales; Camry, approximately 800,000 sales | Golf, approximately 785,000 sales; Passat, approximately 750,000 sales | ||
| Who’s in Charge | Akio Toyoda, 58. The grandson of Toyota Motors founder Kiichiro Toyoda, Akio took the helm in 2009, just in time for the congressional hearings on unintended acceleration and the 2011 earthquake and tsunami that ravaged northern Japan. He has pledged to make Toyota cars more emotional, proving himself serious by pushing the Toyobaru sports coupe through to production and racing a Lexus LFA at the 24 Hours of Nürburgring before it was even on sale. So he’s okay. | Martin Winterkorn, 67. An engineer with his doctorate in metals research, Winterkorn is credited as the source of VW’s ambition to be No. 1 in the world by 2018. But is he really in charge? VW’s supervisory board is helmed by Ferdinand Piëch, the famously megalomaniacal grandson of Ferdinand Porsche. The board includes four other Piëch and Porsche family members, including Ferdinand’s wife, Ursula, a kindergarten teacher. In terms of blood ties, Winterkorn is an outsider. | ||
| In the Vault | The company has around $40 billion in cash on hand. Toyota’s U.S. earnings in the second quarter of this year exceeded those of Ford, GM, Honda, and Nissan combined. | Audi and Porsche mint money. Audi alone is sitting on cash reserves in excess of $20 billion. And a recent report in Bloomberg Businessweek claimed that VW made an average of $23,200 on each of the 162,145 Porsches sold in 2013. | ||
| Future’s so Bright | Toyota is curbing investment in additional production volume, with a freeze on building any new plants until 2016 or so. That’s so the company can re-burnish its reputation for quality. Currently, Toyota is on pace to cede the global sales crown to Volkswagen in 2014, but stepping back and shoring up the fundamentals with an eye on the long term is never a bad idea. | VW is investing huge sums in its products, including, notably, a five-year, $86 billion R&D commitment. A new three-row SUV slated for production in late 2016 should bolster sales in the U.S., historically a VW weak spot. And in China, which will remain the industry’s biggest market for the foreseeable future, Volkswagen is king. | ||
| Storm Clouds on the Horizon | Toyota’s production freeze may be poorly timed. Other companies are chasing sales gains by investing in the Chinese market, where VW sells three to four times as many vehicles as Toyota. But following those brands’ lead might not help Toyota much anyway; it’s hobbled there by China’s resentment and distrust—and occasional boycott—of Japanese goods, factors Volkswagen doesn’t have to worry about. And while being Japanese has helped Toyota in the past as the country’s economic policy suppressed the yen’s value, benefiting Toyota’s export operations, the currency is now strengthening. So Japanese products are becoming more expensive and export profits are dwindling. | Globally, Toyota passenger vehicles are available under only two brands, Toyota and Lexus. (Scion only exists in North America.) Volkswagen has eight. Keeping them all fed and watered with fresh product is expensive. And mandates that curtail brand independence—such as Porsche’s assigned responsibility for all VW Group sports-car development—are creating friction. The situation might get worse if VW acquires more brands. Rumors were flying that it might purchase the Fiat Chrysler Alliance, which would give VW two of Piëch’s favorite brands, Jeep and Alfa Romeo. Analysts already worry that the highly diversified conglomerate might fracture with the inevitable departure of the 77-year-old chairman. | ||
| By 2025, It’ll Be Ahead . . . | Because it’s adhering to the methods and principles that brought it here in the first place. | Only if it can continue to grow without compromising quality or letting the cost of running its varied brands spiral out of control. |
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