Volkswagen in the first half of the year overtook Toyota to become the world’s biggest automaker, capturing the no. 1 spot long coveted by the German firm. But most analysts are not impressed because its profit margins still lag Toyota.
Volkswagen reported earlier this month it had sold 5.04 million vehicles from January through June, trailed by Toyota’s 5.02 million, according to sales figures it released on Tuesday.
General Motors came in third, with 4.86 million vehicles sold.
Though Volkswagen announced its goal to claim the crown as far back as eight years ago, the company has since moved to downplay the news, describing its latest performance figures as “‘satisfactory’ in a difficult environment,” reported CNN Money.
A spokesperson told USA Today: “We do not comment on the figures of other automakers. The goal of the Volkswagen Group is to focus on qualitative growth and not being No. 1 in sales.”
News of its success may not surprise most in the industry, according to March reports. “Make no mistake, almost everybody in the automotive industry expects Volkswagen to pass Toyota and become No. 1 in the world this year,” reported CNBC’s Phil LeBeau.
Some experts have said Volkswagen is overreliant on China, where rapid growth of the car market has slowed. The automaker’s annual production there is 3.7 million vehicles, and by 2019 is projected to expand to 5 million, said CEO Martin Winterkorn to CNBC.
But “Volkswagen Passenger Cars brand was not immune to current trends in China,” said Volkswagen’s Board Member for Sales Christian Klingler in a statement.
This year, Volkswagen has sold 1.74 million vehicles in China, compared to Toyota’s 512,800, reported Bloomberg. And what wasn’t sold there was compensated “as car demand in Europe accelerated at the fastest pace in 5 1/2 years,” said the report.
But they won’t be able to depend on demand in Western Europe, which experts say is relatively stagnant and particularly exacerbated by the uncertainty swirling around Greece’s debt crisis.
Now, the German automaker is preparing to invest more in the US, where they were outperformed by Toyota. A new SUV will be introduced next year to meet American consumer demands, and Volkwagen’s Chattanooga plant will be upping its production of bigger vehicles, Dr. Winterkorn told CNBC in March.
“We procrastinated in the US, it's true,” Winterkorn said. “And we are changing that.”
The chief executive has also emphasized Volkswagen’s target of an 8 percent operating profit margin. In the 2015 fiscal year, the company took in profits of 6.3 percent compared to Toyota’s 10.1 percent.
As carmakers battle to remain competitive, experts say they would be right to prioritize profitability over sales volume. This victory offers little more than bragging rights in an extremely close race, reported USA Today.
“Sales volume you can buy,” AutoTrader.com analyst Michelle Krebs told USA Today. “I think the race for profitability is the right race. So if I were running an automaker that’s the number I would be looking at.”