I read a column today by John McElroy over at Autoblog. The column was about Volkswagen, a company that defies most modern business-school logic and yet remains the most profitable car company in the world.
Some of the numbers from the article:
- Volkswagen employs a staggering 550,000 people. GM, Ford and Fiat/Chrysler combined employ 574,000 people.
- Volkswagen market 12 different vehicle brands – VW, Audi, Seat, Skoda, Bentley, Lamborghini, Ducati, Porsche, Bugatti, MAN, Scania, and VW Commercial.
- Volkswagen’s revenue is $200 billion (with a B) more than their nearest automotive rival and they made $14 billion in profits last year.
As if that weren’t enough, the really interesting part about Volkswagen’s operations is that they are much more vertical than modern business schools would recommend. Yes there are common VW vehicle platforms shared from brand to brand, but they still have the freedom to add their own touches, presumably after making a business case for doing so. Each of those brands has its own board and runs as if they’re a smaller company rather than part of a massive conglomerate.
The car business has always been, and always will be, about the product. You can have all the fancy marketing you like but if you don’t have the product, the market will find you out eventually.
Volkswagen’s modern range might be Das Boring for many of us, but they hit the mark for many others with their VW branded vehicles and the rest of the group’s range occupy solid places in their respective market segments.
Audi has been the emerging golden child of the luxury class for the last 20 years and is now on equal footing with its German rivals. Skoda has built a reputation for surprising value and good build quality. Lamborghini and Porsche are outstanding entrants in their respective classes.
Volkswagen aim to be the world’s biggest carmaker by 2018 and one gets the feeling they’re well on their way.
Because it’s all about the product. Even if you vertically integrate and have massive staff numbers and costs, the product will carry that load. Fantastic product that fulfils its brand promise and offers great perceived value will beat a weaker entry with a slick marketing campaign – every time.