Volkswagen set to become biggest carmaker this year

Volkswagen will probably become the world's biggest carmaker this year, vaulting past Toyota Motor and General Motors on gains in emerging markets. The German company's sales, third among carmakers in 2010, will probably rise 13 per cent to 8.1 million vehicles this year, based on the average of three analysts surveyed by Bloomberg. GM will likely remain second and Toyota, which led the industry for three consecutive years, will probably tumble behind the two rivals, according to the survey. Volkswagen sales in China may rise almost 20 per cent this year and more than double in India, according to estimates at researcher J.D. Power & Associates. That's a contrast to Toyota, which is suspending plants in Southeast Asia because of floods in Thailand, months after an earthquake crippled production in Japan. "Emerging markets are at a stage of car-adoption by consumers and there is still a large space for sales to grow," said Jenny Gu, Shanghai-based senior markets analyst for J.D. Power. "VW realised this and put a lot of effort on emerging markets.'' Estimates at J.D. Powers, IHS and PwC Autofacts were used to calculate the average projections. Volkswagen had fallen 3.3 per cent this year in German trading before yesterday, weighed by concerns about the European debt crisis. Still, that's a smaller decline than the 34 per cent drop at Detroit-based GM and 20 per cent at Toyota. Next year's lead Toyota may regain the lead from VW next year as the recovery of the Japanese company's facilities from the March earthquake will pave the way for the Toyota City-based automaker to sell 8.4 million cars, or half a million units more than VW, according to research firm IHS. J.D. Power projects VW will retain its lead in 2012, outselling Toyota by about 50,000 units. VW, which also owns the Audi and Skoda brands, focused on boosting capacity and its network of dealerships as it built its brand in markets such as China and India, Gu said in a tele-phone interview. Automakers are turning to developing economies for growth as sales in mature markets slow. China, the world's second-largest economy, will grow 9.5 per cent this year, six times the pace of the US and Euro area, according to International Monetary Fund estimates last month. The country is already the biggest auto market globally, with sales exceeding 18 million in 2010. VW sales in China will probably reach 2.3 million units and 116,000 in India this year, with the two markets accounting for about a third of the company's sales, according to J.D. Power estimates. VW, which operates more than 60 factories worldwide, plans to spend a record €62.4 billion (Dh318 billion) — excluding its ventures in China — over the next five years to raise annual production to 10 million by 2018. VW's Chinese joint ventures, which are not consolidated, will invest another €14 billion through 2016. The German company may reach the target three years ahead of schedule, according to a person familiar with the matter. The company has forecast its global sales will increase 5 per cent this year after posting a record 7.2 million deliveries in 2010. The German carmaker's Audi luxury unit overtook Daimler's Mercedes Benz as the world's second-largest maker of high-end vehicles earlier this year, trailing only BMW. First in China VW, the first overseas carmaker to enter China three decades ago, is planning to add two plants and double production to 3 million cars annually. Audi is considering a new factory there to expand annual manufacturing to as high as 700,000 vehicles by 2015 as luxury demand increases, Dietmar Voggenreiter, its China president said on Thursday. Still, VW faces hurdles with its partnership with Japanese carmaker Suzuki Motor, whose venture in India is the top seller in the market. The German carmaker is also facing delays in a planned merger with Porsche. Suzuki is seeking to end an alliance with its German partner after accusing it of violating a cooperation agreement by not sharing technology. VW has said it plans to keep its stake. Ending the partnership with Suzuki would undermine the German automaker's credit assessment, Moody's Investors Service said in a statement yesterday. Toyota would be relinquishing its lead after last year's record recalls, which has led its president, Akio Toyoda, to say his key priorities will be focusing on customer satisfaction and restoring Toyota's reputation.