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The news surrounding foul play by Volkswagen in the EPA emissions tests is a major blow to the group and in particular the core VW brand in the US, which has already seen its share of US light vehicle sales contract from 3.0% in 2012 to 2.2% in 2014 and further to 2.1% in the year-to-August 2015. The investigations are on-going and so it may well be that other OEMs become embroiled in this scandal yet but VW’s aspirations in the US will inevitably suffer a major setback and it seems inevitable that the Volkswagen Group will lose its global sales crown that it has only just won from Toyota based on the volume of deliveries announced by each company for the first half of 2015.
VW Group and Toyota Motor Corp Light Vehicle Sales, 2009-2014 and Deliveries, 2015 H1
Source: Euromonitor International/JATO Dynamics
VW and Toyota reported global deliveries of 5.04 million and 5.02 million units in the first half of 2015 and so VW has only edged out Toyota by the narrowest of margins; just 20,000 units. Theoretically, VW Group could have ended up beating Toyota by around 50,000 units in 2015 but the impact on sales is essentially impossible to quantify given the uncertainty surrounding the consumer reaction to the scandal but also other factors such as the implications for resale values of VW Group vehicles. Nevertheless, calculations reveal that the VW Group could easily lose 300,000 sales in the remainder of 2015, easily wiping out their potential lead over Toyota. Moreover, if there is a wider backlash against diesels in general, I can envisage consumers defecting to hybrids in their droves and Toyota would naturally stand to be a major beneficiary given its dominance in hybrid cars.
This 300,000 unit loss for the VW Group is based on a hypothetical scenario whereby the group loses 15% of its sales in the US in the remainder of 2015 – although the US is the epicentre of this scandal and VW has already withdrawn diesel models from sale, the damage is likely to be rather limited if you bear in mind that the diesel penetration in the US is only around the 3-4% mark. However, diesels account for more than 1 in 2 passenger car sales in Western Europe and so a hypothetical loss of 25% of VW Group’s potential sales in Western Europe can be envisaged. If you apply these hypothetical losses to estimates for VW Group sales for the remainder of 2015, it easily adds up to 300,000 units and this doesn’t even consider any potential fallout in South America, Eastern Europe, MEA and APAC. The fact of the matter is even if VW Group loses just 5% of its potential sales in Western Europe and the US in the remainder of 2015, this would be enough to leave the Group trailing Toyota in 2015. It therefore seems inevitable that VW will lose its global sales crown.