Behind the Wheel with Phil Lebeau

VW Deals and Takes Big Swing at #1 Worldwide

Volkswagen, the world's #3 automaker may not be a brand with much pull here in the U.S., but around the world it's flexing its muscle.

In the last two days it has struck two deals that should go a long ways towards helping the German automaker eventually pass Toyota to become #1 in the world.

Yesterday, VW spent $5.8 Billion to buy just under half of Porsche. This morning, it plunked down another $2.5 Billion for 20% of Suzuki.

That's $8.3 Billion for substantial stakes in two brands that have sizable presence in Europe and Asia. Two sizable investments VW plans to use to expand its reach around the world, and yes to surpass Toyota as #1. VW is already well positioned being #1 in Europe and a close #2 in China. Where it lacks strength are in developing markets, particularly in India. That's where the Suzuki's dominance will pay off.

What's interesting about the VW expansion is the fact the brand remains stuck in neutral (sales down 7.1% this year) here in the U.S.

Considering this is the second largest market in the world and the most profitable, VW's struggles here are not insignificant. Yes, the German automaker is ramping up plans to grow its business here in the states, but it will be a few years before those plans pay off.

Meanwhile, Toyota remains #1 worldwide and that reign will not end immediately. It is firmly entrenched as #2 in the U.S., holding steady in Europe, and picking up steam in China. That's not to say it doesn't have its problems. Still, VW has its work cut out catching Toyota. These latest deals will definitely help as the German automaker tries to leverage ten brands (Audi, VW, Skoda, Lamborghini are a few of the most prominent) around the world.


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