Volkswagen AG chairman Bernd Pischetsrieder vowed on Monday that his company would fight to hold on to its market share in the US even though the car maker is being squeezed by the euro’s appreciation against the dollar, Dow Jones reported.
But he reportedly said that, at the same time, that there was no question of aggressively cutting prices to maintain market position at a time when the US car market is experiencing fierce competition due to vast overcapacity and high inventories of unsold cars.
“Market prices and our market position won’t be sacrificed” due to the euro’s appreciation, he stated, according to Dow Jones.
According to the newswire, Pischetsrieder noted that 60% of Volkswagen’s car imports into the US. come from its plants in Mexico and Brazil. He said 15% of the output of these plants is exported to Europe, and that figure will rise over time, increasing the company’s natural hedge to transatlantic currency fluctuations.
According to Dow Jones, Pischetrieder referred to the deep discounts and other cut-throat sales come-ons being practiced by car dealerships as “incentives of mass self-destruction” and said that European car makers are all blaming each other for the undercutting practice that’s eroding margins. “We’re in a position that’s anything but comfortable,” he reportedly said, adding that Volkswagen will continue to follow a strategy aimed at underpinning used car prices.
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“Why should we concentrate on volume or revenue growth, when it’s misleading because it’s not genuine?” he asked a dinner of automobile executives organised by Automotive News Europe, Dow Jones said.
The report said the VW chief added: “We should be concentrating on profit”, although he admitted that this is “easier said than done in a market that’s not growing.”
According to Dow Jones, Pischetsrieder predicted a shakeout in the car dealerships sector in Europe, noting that there are more than 60,000 dealerships in Europe and about 20,000 in the US for markets that are about the same. The number of owners of retail outlets will be reduced “drastically,” and Volkswagen, too, is taking steps to reduce the number of its dealerships, he reportedly said.