VW-Porsche combine sits atop the automotive heap

Sandy Smith's picture

The automotive world is now being led by a beetle. For the first time ever, German automaker Volkswagen-Porsche is the world's largest automaker, dropping former No. 1 Toyota into second place by a hair.

Through October, the German combine has produced 4.4 million vehicles, beating its Japanese rival by about 400,000 units.

A report in the British newspaper The Guardian attributes Volkswagen's performance to government measures in China, Germany and the United Kingdom designed to stimulate the domestic auto industry in each country. China cut sales taxes and introduced subsidies to stimulate domestic demand, while Germany and the UK rolled out cash-for-clunkers programs akin to the popular US program that boosted sales not only for the Detroit Three but also for Toyota.

Two other factors also contributed to VW's swiping the crown from Toyota. One was a sharp cutback in production at Toyota at the beginning of the year. The automaker cut production by half in January, and it has remained at that reduced level since. Japan's leading automaker has the capacity to produce 10 million vehicles a year, but expects to produce only 7 million this year, down from 9.24 million last year. The other was VW's forced acquisition of Porsche, which followed in the wake of Porsche's unsuccessful attempt to buy VW earlier this year.

Volkswagen's rise also pushed General Motors, the world's largest automaker until Toyota passed it two years ago, down another notch, to third place globally. Both GM and Volkswagen have had some success in the Chinese market, where VW has spent several years introducing new models.

Written by Sandy Smith

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