Volkswagen increases yearly sales worldwide, BMW fares
poorly in crash test results
By Kai Sandvig, Business Editor
Posted September 10, 2007
As security markets worldwide sway back-and-forth over
the US credit crisis, the automobile industry also experiences
the global tidal ebbs. For Volkswagen AG (VOW), the tide pools
of cash increase as sales worldwide have advanced.
In a news brief distributed with The European Weekly
Online's newsletter last week, VOW announced positive sales
statistics in a recent press release. The Wolfsburg, Germany
based company increased global sales 7.8 percent within the last
year. Volkswagens' largest sales increases have come from the
Asia Pacific region, 20.9 percent, South America, 27.7 percent
and the Eastern and Central Europe regions, 22.8 percent. These
figures have prompted VOW to expand its operations.
According to the Wolfsburg Allgemeine Zeitung, VOW plans
to increase production of a new model of Golf, Rechtslenker-Golf,
by at least 40,000 units. Assembly plants in Wolfsburg will
increase staff and export these models to South Africa.
The good news from production confluences with investors.
Since October 2006, VOW stock has garnered 89 points, nearly a
60 percent annual increase on the DAX. Reports of side-impact
crashes killing 9,000 people in the US last year instigated the
study. However, on Friday, VOW lost one percent of its stock
value in trading dropping 1.49 Euros, prior to and after poor
employment figures released by the US government.
This should not come as a surprise to Volkswagen America,
VOW's American subsidiary founded in 1955, due to lower data
from 2006. According to research data by Morgan & Company Inc.,
an auto industry analyst, August year-to-date sales of VOW
automobiles decreased 8.5 percent, or 6,183 less autos through
the month.
Proprietor and President of Morgan & Company Inc., Mark
Cornelius, believes Volkswagen sales in the US have decreased
due to a few reasons, one being that the model is a bit more
expensive than its competitors. Cornelius also mentioned
Volkswagen had “quality issues that hurt [its] reputation.”
“The Passat didn't really click with consumers,”
Cornelius said.
According to the data, sales of foreign autos increased
to nearly 2.5 million autos year-to-date in August, while
domestic auto sales have declined to nearly 5 million autos
year-to-date. For VOW, this total declined from 72,927 autos in
August 2006 to 66,744 autos in August 2007. German made
automobiles including Volkswagen AG/Audi and Bavarian Motor
Werken hold a two percent share of the US auto market, with BMW
making gains and VOW falling from a 2.5 percent share of the
market in 2000. Porsche and Mercedes both posted large gains in
US share of sales, while Jaguar's share fell the most in
year-over-year.
Cornelius believes the rise in foreign auto sales and the
decline in domestic sales is attributed to “the perceived
quality of foreign autos” and the “fresh design” foreign autos
offer consumers. Cornelius also mentioned that current fuel
prices have sent consumers in search of better mpg.
However, the 2008 BMW 5 Series performed the worst out of
all luxury sedans in a recent side-impact crash test survey
conducted by the auto insurance industry. The Insurance
Institute for Highway Safety (IIHS) gave its highest ratings to
the 2008 Volvo S80, Kia Amante and Acura RL. The IIHS gave its
second highest ratings to another European luxury auto, the 2008
Mercedes E-Class and the 2008 Cadillac STS. The IIHS reported
poor performance results with chest and abdomen airbags in the
BMW 5 Series.
In light of these findings, BMW's year-to-date auto sales
from 2007 have increased 8.7 percent, according to the data
provided by Morgan & Company Inc.
Kai Sandvig can be
reached at kaisandvig@europeanweekly.net
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