dlq04

From Auto News Europe:

A skeptical Automotive News Europe reader commented that Volkswagen's quest to topple Toyota as the world's No. 1 car company will bankrupt the German automaker. That won't happen soon, or likely ever.

VW has a cash pile of 19.6 billion euros ($27 billion), 9 billion euros more than at the start of the year. The cash surplus was boosted by record sales of 5.4 million new cars in the first nine months. The company expects 2010 unit sales to exceed last year's record level of 6.3 million cars, driven by high growth in China and booming sales at its Audi premium brand.
VW may use some of its huge "war chest" to achieve its target of selling 10 million vehicles earlier than its stated goal of 2018. It could, for example:

• Raise its stake in Suzuki to a controlling 51 percent, allowing it to consolidate Suzuki's car sales into its own. VW paid $2.5 billion in January for a near 20 percent stake in the Japanese automaker, whose unit sales were nearly 1.2 million last year.

• Buy Porsche outright. VW purchased a 49.9 percent stake in the sports car maker for 3.9 billion euros from owner, Porsche Automobil Holding SE, which has 6 billion euros of debt resulting from its failed attempt to take over VW. Europe's largest automaker has an option to buy the remaining 50.1 percent for another 3.9 billion euros. The purchase would add 150,000 annual sales, if Porsche reaches its goal of selling that many cars.

• Relieve Fiat of its money-losing Alfa Romeo brand, valued at up to 1 billion euros. Fiat CEO Sergio Marchionne plans for Alfa to become profitable by 2014 selling 500,000 cars, up from 102,000 last year. Marchionne says he won't sell Alfa, which Fiat acquired in 1986 to prevent Ford from buying it, but a cash offer from VW might prove hard to refuse.
"VW is generating enough cash to buy Alfa Romeo once a quarter ... VW can afford to do almost anything," Bernstein analyst Max Warburton wrote in a research note.

Are there any darks clouds on the horizon to console VW's rivals? Not at the moment, it seems. “VW is well positioned and faces no concrete risks for a notable weakening of its business,” wrote Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler.

Legal Bill

Interesting story, Dave. To what do they owe their great success? I have not been following VW, except for their recent adds on TV which appear to be giving away VWs. The pricing seems very attractive.

dlq04

From Auto Extremist:

Diesel engines are tremendously popular in Europe and other parts of the world because of the nose-bleed high fuel costs and associated taxes on engine displacement, among other things. And compared to Mercedes-Benz – a longtime industry leader in diesel power – Audi had been a laggard in the market with their diesel engines.

So what did Audi do? The VW Group - Audi’s parent company - decided that their moniker for diesel - TDI - needed street credibility. And what did they determine was the best way to go about getting it? By racing it. But not just racing it in some second- or third-tier racing series, but racing it on the world’s grandest road racing stage: The 24 Hours of Le Mans.

What Audi was contemplating was heretofore unthinkable. A major manufacturer racing diesels in the toughest competitive environment in the world? Crazy.

And what happened? Audi came up with the most advanced thinking in diesel power they could muster and stuffed these super-high-tech engines in their ultra-successful Le Mans prototype racers, and won convincingly and repeatedly. And now “TDI Power” is a name that bristles with integrity, technical gravitas and most important, success.

In short, Audi wanted it more, they demanded more of themselves and they knew it would take relentless focus and total commitment to get it done.

raymo19

I guess if you have $27 billion in cash lying around you're not too concerned if your stock loses 2/3 of its value. But it is starting to rebound.

dlq04

Diesels are coming to America big time...

Audi announced it will add diesel variants to every volume product in the United States within five years as it attempts to meet stricter fuel economy targets while satisfying a surprising surge in U.S. dealer demand. Audi will add diesel versions of the current-generation A8 and A6 sedans as well as the Q5 crossover. The next-generation A4 is likely to receive a four-cylinder diesel engine by 2015.

"We will roll out the technology across the Audi line," said Johan de Nysschen, president of Audi of America, in an interview last week.

"Dealers are telling us that there is significant consumer demand" across the Audi portfolio for diesel, spokesman Jeff Kuhlman said.

[Who says racing doesn't pay off.... those LeMans victories are turning around the image of dirty, 1970s-era GM dogs.]

De Nysschen said diesel sales could account for up to 20 percent of Audi's total sales in the United States by 2015 compared with 5.5 percent today.

BMW and Mercedes-Benz are working on similar-sized diesels for the U.S. market. BMW also is preparing to expand its diesel range. It currently offers a 3-series sedan and X5 crossover diesel but may add a diesel variant to the X3 crossover and 7-series sedan. Mercedes-Benz is likely to offer a diesel in the GLK compact crossover and next-generation C-class sedan. Mercedes already has a diesel engine in the E-class sedan and in three crossovers.