By Kevin Meyer
We've discussed Volkswagen before – both the possibility that their focus on long term excellence will vault them into the top tier of auto manufacturers but with the danger that their strategy may become focused on volume instead of value.
Well, unfortunately the focus on volume may be winning.
Volkswagen AG has one of the brashest goals in the auto industry—to dethrone Toyota Motor Corp. as the world's largest auto maker.
To become the world's largest car maker by 2018, Mr. Winterkorn and his management team have set themselves a lofty goal of selling 800,000 VWs a year in the U.S. by then, and another 200,000 cars from its luxury moniker Audi. VW executives have said they aim to become profitable in the U.S. by 2012 or 2013, selling 400,000 VW-brand cars annually by then, after racking up losses in the U.S. of close to $1 billion in some recent years.
It's an audacious—and some analysts say, impossible—target.
So where have we heard that before… the siren call of volume and being the "biggest?"
Ah yes, GM.
The auto company has been guided to the lip of a cliff in part by following the flawed line of thought that it needs to be No. 1 in market share — as if there were some eternal prize for the car company that sells the most cars or being the girl with the most cake. And the business media generally play along, reporting sales rankings as if they were the end-all and be-all.
Valuing such a showy if meaningless sign of strength might seem important if you're working in the traditionally macho world of the newsroom, and it also resonates in the equally testosterone-filled boardroom, particularly for boardrooms in Detroit.
But being No. 1 doesn't matter one whit.
Yep, that worked out pretty well. That post was written in 2007, and the company proceeded to dive off the cliff, rescued by some politicians that believe capitalism doesn't also require failure or punishment for sheer idiocy.
But where else have we heard about the crazy focus on the top line? Yep, none other than Toyota. The company that used to define excellence and customer value somehow forgot… and learned a very painful lesson. After decades of methodical growth based on demand generated via increased customer value, their focus shifted toward sheer size.
This is beyond a mere lapse in judgment – a human mistakethat anyone could have made. This is nothing short of wholesale abandonment of their founding principles. This ain't Kiichiro Toyoda's car company any more. "Since questions were first raised about possible safety defects, we have been pushing Toyota to take measures to protect consumers," LaHood said. The company we have so long admired would not have had to be pushed by the government into doing right by its customers.
Nothing short of shameful.
Core values of quality and customer service were lost on the top executives, problems were ignored or even swept under the rug, trends weren't identified. The company will probably recover… eventually. But the company has paid a huge price – both financial and in terms of reputation.
So Volkswagen… you want to be the biggest, eh? Good luck with that.