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Volkswagen increases yearly sales worldwide, BMW fares poorly in crash test results

By Kai Sandvig, Business Editor
Posted September 10, 2007


    As security markets worldwide sway back-and-forth over the US credit crisis, the automobile industry also experiences the global tidal ebbs. For Volkswagen AG (VOW), the tide pools of cash increase as sales worldwide have advanced.

    In a news brief distributed with The European Weekly Online's newsletter last week, VOW announced positive sales statistics in a recent press release. The Wolfsburg, Germany based company increased global sales 7.8 percent within the last year. Volkswagens' largest sales increases have come from the Asia Pacific region, 20.9 percent, South America, 27.7 percent and the Eastern and Central Europe regions, 22.8 percent. These figures have prompted VOW to expand its operations.

    According to the Wolfsburg Allgemeine Zeitung, VOW plans to increase production of a new model of Golf, Rechtslenker-Golf, by at least 40,000 units. Assembly plants in Wolfsburg will increase staff and export these models to South Africa.

    The good news from production confluences with investors. Since October 2006, VOW stock has garnered 89 points, nearly a 60 percent annual increase on the DAX. Reports of side-impact crashes killing 9,000 people in the US last year instigated the study. However, on Friday, VOW lost one percent of its stock value in trading dropping 1.49 Euros, prior to and after poor employment figures released by the US government.

    This should not come as a surprise to Volkswagen America, VOW's American subsidiary founded in 1955, due to lower data from 2006. According to research data by Morgan & Company Inc., an auto industry analyst, August year-to-date sales of VOW automobiles decreased 8.5 percent, or 6,183 less autos through the month.

    Proprietor and President of Morgan & Company Inc., Mark Cornelius, believes Volkswagen sales in the US have decreased due to a few reasons, one being that the model is a bit more expensive than its competitors. Cornelius also mentioned Volkswagen had “quality issues that hurt [its] reputation.”

    “The Passat didn't really click with consumers,” Cornelius said.

    According to the data, sales of foreign autos increased to nearly 2.5 million autos year-to-date in August, while domestic auto sales have declined to nearly 5 million autos year-to-date. For VOW, this total declined from 72,927 autos in August 2006 to 66,744 autos in August 2007. German made automobiles including Volkswagen AG/Audi and Bavarian Motor Werken hold a two percent share of the US auto market, with BMW making gains and VOW falling from a 2.5 percent share of the market in 2000. Porsche and Mercedes both posted large gains in US share of sales, while Jaguar's share fell the most in year-over-year.

    Cornelius believes the rise in foreign auto sales and the decline in domestic sales is attributed to “the perceived quality of foreign autos” and the “fresh design” foreign autos offer consumers. Cornelius also mentioned that current fuel prices have sent consumers in search of better mpg.

    However, the 2008 BMW 5 Series performed the worst out of all luxury sedans in a recent side-impact crash test survey conducted by the auto insurance industry. The Insurance Institute for Highway Safety (IIHS) gave its highest ratings to the 2008 Volvo S80, Kia Amante and Acura RL. The IIHS gave its second highest ratings to another European luxury auto, the 2008 Mercedes E-Class and the 2008 Cadillac STS. The IIHS reported poor performance results with chest and abdomen airbags in the BMW 5 Series.

    In light of these findings, BMW's year-to-date auto sales from 2007 have increased 8.7 percent, according to the data provided by Morgan & Company Inc.

Kai Sandvig can be reached at

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