M O TO R I N G T H E F U T U R E

Transcription

1 MOTORING THE FUTURE

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3 MOTORING THE FUTURE VW and Toyota Vying for Pole Position Engelbert Wimmer With contributions by Arun Mani PA Consulting Group responsible for the content and owner of the IP

4 PA Consulting Group 2012 Translated by Brian Melican Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act First published 2012 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number , of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN ISBN (ebook) DOI / This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress

5 CONTENTS List of Figures and Tables Acknowledgments Preface About the Author vii ix xi xiii 1 The Car Industry Today: Staging a Stellar Comeback 1 2 Volkswagen: The Surprise Challenger Shaping a Global Automotive Empire Strategy for Reaching the Top Showdown in the USA Powerful Competitors China s State-Controlled Economic Boom Expansion in Emerging Economies VW Pushes Sales Prefab Variety Growing without Getting Bigger Intelligent Brand Strategies Process Is the Problem Going the Volkswagen Way Small Costs Big Luxury Becomes Obligatory The Search for the Right VW Engine The Price of Politics Piëch, Then Winterkorn and Who Next? Toyota: An Auto Giant Overcoming a Gigantic Crisis The Toyota Shock A New Beginning The Power of Tradition: How a Japanese Loom Builder Became an Automotive Giant 134 v

6 vi CONTENTS 3.4 The Legend and the Reality Behind It: The Toyota Production System A Global Player with a Distinctly Japanese Identity Toyota s Luxury Strategy: Lexus vs. Daimler and BMW Motorizing Emerging Economies: Toyota s Car for the World Managing Relationships the Japanese Way Toyota: An Endurance Runner The Disaster: Runaway Toyotas Change of Generations: Exploring Future Possibilities and Carrying the Load of the Past Environmental Protection: Toyota s Development of Alternative Drivetrains The Race for Pole Position: Winning by a Nose Phoenix from the Ashes Round Two Volkswagen Moves to Overtake Toyota: Digging in on the Green Front The Battle on the Bottom Line The Tides of Globalization The Final Lap Comparing Corporate Values Epilogue: New Challenges and New Engines Population Growth and Oil Supplies Biofuels: Green Gasoline A Tank Full of Gas Hoping for Hydrogen Electric Cars: The Day after Tomorrow 237 Notes 255 References 260 Index 265

7 LIST OF FIGURES AND TABLES FIGURES 1.1 Global sales forecast until 2015 by region Car segments transforming Sales forecast for China through Transition from conventional platforms to modular toolkits Estimates of average carbon emissions of fleets from various European and American manufacturers Total cost of ownership scenarios for conventional, hybrid, and electric vehicles in USA and Europe Calculating the costs of lowering CO 2 emissions through The Toyota concern: a network of companies Supply management: Japanese versus European/US model Sales forecast for the USA until J.D. Power and Associates 2011 vehicle dependability study, US market The appendix of corporate values Global population growth Worldwide oil consumption Oil price curve based on yearly averages Alternative fuels: an overview Technology hype cycle Fuel usage distribution in an average vehicle where does the gas go? Changes in battery costs per kwh Global sales forecasts for plug-in-hybrid and electric vehicles 252 vii

8 viii LIST OF FIGURES AND TABLES TABLES 1.1 Comparison of 2010 sales and revenue Analysis of segment development 2.1 Brands and acquisitions of Volkswagen AG 2.2 Car sales of the ten largest OEMs in China, January July 2009 compared to January July Major shareholders

9 ACKNOWLEDGMENTS The work at hand represents an extended and thoroughly revised edition of Antrieb für die Zukunft, its German-language predecessor. In updating this book for translation, I have incorporated new facts and material, extending the scope to the American manufacturers, who have staged a stellar comeback in 2010 and I also took a closer look at new competitors from the Far East, especially the up-and-coming Korean Hyundai/Kia group, inasmuch as they too have taken up the challenge of racing to the top in terms of volume growth and next-generation vehicles. Antrieb für die Zukunft was written with two co-authors: Petra Blum and Mark Christian Schneider. This new edition would not have been possible without their profound input for the German book, which was published in Furthermore, I remain very grateful to the two companies so closely portrayed in this book. Both Volkswagen and Toyota were very supportive of the project, and I would like to express my deep gratitude to the managers at both companies for the many insightful conversations we shared on the topic. I would also like to mention Arun Mani, an energy expert and member of the PA Consulting Group management team. Arun made a decisive contribution to the last chapter with his views on the interplay of the energy sector and the car industry (section on Utilities and the adoption of electric vehicles in Chapter 5). I am greatly indebted to him for his help in showing where the frontiers will lie in the future of automotive mobility. In fact, there was a whole team of people at PA Consulting who worked on this book, and I would like to extend my thanks to Karsten Gross from Marketing, consultants Felix Salditt and Michael Tickle, and Thorsten Brückner from the PA Knowledge Processing Centre. Deserving of a very special thank you is the ever-accurate Hanns Peter Becker, a consultant and engine specialist who was indispensible in making our mathematical models work. I would also like to thank Brian Melican, ix

10 x ACKNOWLEDGMENTS a freelance writer, journalist and translator, for his patience, endurance and hard work in putting this work into English and copy editing the final stage. Finally, and most importantly, I would like to thank my family for their unfailing support.

11 PREFACE The story of this book begins back in 2007, when Martin Winterkorn, having just taken office as CEO of the automaker Volkswagen, called out the worldwide market leader Toyota. By 2018, Winterkorn declared, the German Volkswagen Group would surpass the Japanese industry champion and become the number one automotive manufacturer in the world. At the time, the race between the then comparatively much weaker VW group and the seemingly all-powerful Toyota Motor Corporation seemed more than unequal. Yet the idea that VW was trying to overtake Toyota, as improbable as it then seemed, thrilled the entire industry and, not least, inspired the author of this book to discuss the topic with industry experts and automotive managers all over the world. After many interesting discussions and a lot of research, the idea was born to distill all this knowledge into a narrative. The first edition of this book was published in 2010 and told the story of how VW would go about climbing to the top. Taking the very public challenge to Toyota as a narrative backdrop, the first edition of Motoring the Future analyzed the strengths and weaknesses, corporate cultures and philosophies of these two so very different industrial icons. The analysis often produced surprising insights, not only about these two carmakers, but about the automotive industry itself. Since 2007, the race between VW and Toyota has taken an unexpected turn. Global economic and financial crises, bankruptcies and resurrections of major rivals, governmental intervention and a natural catastrophe which sparked a nuclear disaster in Japan have quickened VW s advance, while Toyota has had to overcome one crisis after another; ironically, the event which has the least long-term importance for Toyota the earthquake and Fukushima meltdowns will probably be the decisive one as far as VW s avowed goal is concerned may well now turn out to be the year in which Volkswagen overtakes Toyota; but the consequences of the natural catastrophe that struck Japan, destroying factories and disrupting supply chains, are not permanent. Toyota xi

12 xii PREFACE has fallen behind unexpectedly, but this will, if anything, spur it on to redouble its efforts in coming years. The race is by no means over. Moreover, the rivalry depicted in Motoring the Future offers a deep insight into the challenges that are looming on the horizon for carmakers: as they have to move away from fossil-fueled combustion to alternative energy vehicles for the mass market, the economic environment for car makers will change tremendously. Each of the major players in the automotive industry is trying to answer the $64,000 question: just how will the car of the future look? This is the decisive field on which the race for control of the industry will be run, and the two competitors VW and Toyota will play a vital role in leading the industry into the new era of green vehicles. Since the first edition of Motoring the Future, I have analyzed and updated Volkswagen s and Toyota s strategies for next-generation vehicles; both are breaking new ground in this area, plotting a course into the future for other manufacturers and suppliers. Whether it is the Japanese or the German carmaker that takes pole position, the winner will change the balance of power in the worldwide automotive industry and show precisely which technologies, philosophies and strategies are needed for car manufacturers to be successful in the market of the future.

13 ABOUT THE AUTHOR Engelbert Wimmer is a business consultant and member of the management team at PA Consulting Group, a leading management and IT consulting and technology firm. Based in Frankfurt, Engelbert leads the firm s global manufacturing and automotive practice. His main focus lies on projects at the critical interface between scientific innovation and business. With his experienced team, Engelbert has helped global manufacturers and suppliers alike on cost and performance issues. He is an expert on the car industry and frequent speaker at automotive industry events. xiii