Volkswagen becomes world’s biggest carmaker, drives past Toyota

When Toyota released its annual sales figures for calendar year 2016, it became clear that arch rival Volkswagen had dethroned it to become the new global leader – the world’s best-selling carmaker for the first time.  

Toyota reported flat global sales of 10,175,000 vehicles (+0.2%) comprising 9,224,000 Toyotas (+0.4%), 780,000 Daihatsus (-1.7%) and 170,000 Hino trucks (+1.0%) .  

As against this, the Volkswagen Group sold 10.3 million (10,312,400) vehicles worldwide in 2016, a year-on-year rise of 3.8 percent. Sales for the German automaker were mainly driven by a surge in sales in China – 3,548,600 units, up 12 percent year on year. It also helped that in China, which does not allow diesel sales, the Volkswagen emission scandal made little or no impact on car-buying trends. Dieselgate though impacted VW in Europe, where 2016 sales slowed down to 4 percent YoY growth (4,206,500 units). 

Stacking up VW's performance

Commenting on Volkswagen becoming the world's biggest carmaker, Sebastiaan Van Doorn, tenured associate professor at Warwick Business School in the department of Entrepreneurship, Innovation and Management, said: "Volkswagen's sales are up 4% globally on an annual basis which is a commendable effort given the turmoil over the past 18 months. At the same time, these numbers have to be appreciated in relation to the performance of other car manufacturers, the geographical focus of sales numbers and bottom-end accounting returns.

"In the US, currently a sluggish growth market, with overall industry sales on par with those of 2015 and 2014, the Volkswagen Group experienced reduced sales by 2.6%, while competitors such as Daimler were able to retain their market share. In the important European home market Volkswagen Group grew 3% while selling less Volkswagens (-1%) than the previous year but selling more Audi (+8%) and Skoda models (+7%). The total European car market grew 6.5% and in this same context Daimler (+13%) enjoyed double-digit sales growth. In China, the car market grew 17.8%. In this booming market, Daimler was able to increase its sales 26.6%, while the Volkswagen Group (+12%) lagged behind.

"Truthfully, this was an important year for Volkswagen and they performed above expectations. Their growth numbers are less impressive as some of their competitors, but given their market share they are in good form nevertheless. Still, we have yet to see how the Volkswagen Group was able to retain or modestly grow their market share in their key geographical markets. Was this at the expense of greater discounts, more friendly finance options and did it take into account buyback/upgrade schemes in the US? Before we can comment on the state of Volkswagen, we have to get more in-depth with the financials, in this sense being the largest car manufacturer in the world by volume could also be considered a vanity metric.

"Finally, while roughly half-a-million US customers have been generously compensated, affected EU customers, roughly 8-10 million, have been left in the cold. Continued negative publicity on this matter may lead to persistent poorer sales growth, particularly for the Volkswagen models in Europe as evidenced by the sale slump. At the same time the Volkswagen Group will be financially unable to compensate EU customers in a similar vein as their US counterparts – a strategic gridlock that they will be hopeful to ride out in as little media attention as possible."