Milestone 1 - Volkswagen Group
Does the company have a comparative advantage over its rivals?
Volkswagen is the second largest car company in the world, only falling behind Toyota. Volkswagen made around 5,328,100* sales last year, while the Volkswagen group did around 8,882,000* with a -4.5 %* decrease from the previous year. Toyota sold around 10,076,246* in 2021. While overall, Toyota sold around 1,194,246 more cars than the Volkswagen Group. With Toyota outselling, Volkswagen does show that Toyota has the upper hand then Volkswagen. Although in Europe and China, Volkswagen has the upper hand. In China, Volkswagen sold around 3,304,800* while Toyota only sold around 1,944,010* cars. In Europe, Volkswagen sold around 3,518,700*, and Toyota sold around 1,037,126*. Volkswagen is based in Germany country while Toyota is based in Japan. Volkswagen seems to have an advantage in European countries and China vs. North America and Asia.
* Sales Based on Best-Selling-Cars.com Volkswagen Group / Toyota
Explain the supply and demand for its essential product or service.
Volkswagen is a car manufacturer, and its demand is based on the car market. As we saw earlier this year and today, car demand is high, while the supply is low. While now, it is settling back down, but for a while, there were no new cars, so used cars rose in price, and they still haven't readjusted back down. Volkswagen's demand is based on how the economy is doing and, in some sense, how the world politics/affairs are doing. For example, as Russia invaded Ukraine, the oil market went crazy. The cost of gas rose, causing the car market to stumble and causing the demand for cars to fall. Volkswagen's demand is based on the state of the world.
Today we can see the rise of Green energy. The world is demanding a cleaner way to get around. With Tesla’s remarkable success in this area, we can see that other car companies will struggle to surpass them. Although Volkswagen has provided electric cars, they do pretty well. Volkswagen is reported to beat Tesla’s sales by the end of 2024. The demand for electric cars will not go away, with one state in America already confirming the ban on gas engines in 2035. Volkswagen's response to the demand for electric cars today shows they will be one of the leading suppliers in the near future of only electric cars.
Provide the GDP of its home country and a key market (country).
Volkswagen Western Europe recorded significantly positive overall growth of 5.4 (−6.5)% in 202. In the economies of Central and Eastern Europe, absolute real GDP increased significantly by 5.6 (−2.4)% in 2021. In Turkey, the GDP growth rate in the fiscal year 2021 rose to 10.3 (1.6)% amid high inflation and a fall in the value of the local currency. Germany’s economic output recorded a positive growth rate of 2.7 (−4.9)% in the reporting year. US economic output increased by 5.7 (−3.4)% in the reporting year despite soaring rates of infection at times. Brazil’s economy posted a growth of 4.4 (−4.2)% in 2021 despite high infection rates. (Volkswagen Annual Report)
Volkswagen Annual Report 2021, https://annualreport2021.volkswagenag.com/group-management-report/business-development.html
How do fluctuations in GDP, economic growth, investments, and patents affect the company’s profitability?
In 2021 we saw COVID-19 start slowly coming down. Volkswagen was affected by COVID-19, and its profits took a massive dump in 2020. Although this year, Volkswagen reported a 12% increase of 250.2 Billion EUR. That was from a -6% that last year. Volkswagen also had to fight against shortages this year. Volkswagen had its revenue hit by both COVID-19 and shortages. The CFO of Volkswagen, Arno Antlitz, stated, "Over the past two years, we have learned better to mitigate the impact of crises on our company.” While they sold fewer cars last year, they made a higher profit. They sold about 6.3% fewer cars last year. Although due to low supply and high demand, they sold their cars at a higher price, allowing them to rebuild their revenue.
References:
Bekker, H. (2022, January 12). 2021 (full year) global: Volkswagen Group Worldwide Deliveries by Brand and market. Car Sales Statistics. Retrieved August 30, 2022, from https://www.best-selling-cars.com/brands/2021-full-year-global-volkswagen-group-worldwide-deliveries-by-brand-and-market/
Bekker, H. (2022, January 31). 2021 (full year) global: Toyota worldwide car sales, production, and exports. Car Sales Statistics. Retrieved August 30, 2022, from https://www.best-selling-cars.com/brands/2021-full-year-global-toyota-worldwide-car-sales-production-and-exports/
Jackson,
I like how you spoke about the impact of trade during the pandemic and how the company adapts to reach more customers by creating downloadable apps for their games in order to reach customers. Adjusting to the fact that people are stuck at home concerned for their health is the best way the company can help adapt to newer times as the world adjust to the effects of the pandemic. That includes finding new ways to reach customers as well new ways of presenting and selling products in order to still suffice the needs and wants of the customers in the market.
Cowen, T., & Tabarrok, A. (2020). Modern Principles of Economics (5th Edition). Macmillan Higher Education. https://mbsdirect.vitalsource.com/books/9781319329464
I found your comparisons of Volkswagon to Tesla very informative. I was unaware that Volkswagon was in the electric vehicle market. As a current Hybrid Toyota driver, for fuel economy, I did not know of there were other close competitors in the electric vehicle market. Tesla has really blanketed the world with their message that it is hard to hear the other brands come through.
Jackson,
Excellent post. As a proud Volkswagen owner myself, I agree how this company has managed to adjust and respond to their consumers in regards to functionality and price point. When I was in the market looking for a new vehicle, I was frustrated with many different automobile dealers due to the expensive price point and the seemingly outdated or lacking safety features for what should be considered standard in 2020. Volkswagen has done well to accommodate and sell affordable, yet safe and sporty looking vehicles. I look forward to seeing their continued development of more electric vehicle styles as the demand for zero-emission vehicles increases.
Jackson,
This was a very interesting post about Volkswagen. They do make very high-quality vehicles that many Americans can afford to purchase. Over the last decade we have seen tremendous fluctuations in the gas prices, not only in our nation but around the world. People are still going to need to get to and from work, school and various other places so the potential for more sales for Volkswagen is there. Even with the drop in their overall sales over the last few years, the fact that they were able to raise prices and still net a profit speaks not only to the quality of the cars they produce but the actual affordability and needs of the consumer.
Jackson,
I think you had an interesting post. Volkswagen has a very fascinating history, and they have produced some very interesting cars. I think that it is especially interesting that they are projecting that they will pass Tesla by 2024 in the electric car market. One thing that I think you might find interesting to consider is the effect of economies of scale on the emission of carbon dioxide. Consider this, 3.4 percent of all light duty vehicles (passenger cars, light trucks, etc.) sold in the U.S. are electric cars (U.S. Energy Information Administration, 2022). There are 253,121,228 light duty vehicles in the U.S. as of 2020 (Bureau of Transportation Statistics, n.d.). This comes out to around 8,600,000 electric cars. Assuming that all the electricity to power these cars is from carbon neutral sources, that would eliminate 39,560,000 metric tons of carbon dioxide from the air (U.S. Environmental Protection Agency, 2022). You can arrive at that number by taking the average amount of carbon released per year per car times the number of electric cars (U.S. Environmental Protection Agency, 2022). However, consider that by making all the non-electric cars on the road today emit five percent less carbon, the result would be the elimination of 56,239,882.44 metric tons of carbon dioxide (U.S. Environmental Protection Agency, 2022). You can get this number by taking the total amount of non-electric cars, multiplying that by the four and a half metric tons per car, then subtracting five percent. Given all the technical problems with trying to turn the U.S. to nothing but electric cars, it would likely lead to better results for the climate to focus on making our cars more efficient, then working on electric cars once we have better technology. This goes to show that the economy of scale also applies to carbon emissions. I hope you find this perspective helpful for your post.
References
U.S. Energy Information Administration. (2022, February 9). Electric Vehicles and Hybrids Surpass 10% of U.S. Light-Duty Vehicle Sales. https://www.eia.gov/todayinenergy/detail.php?id=51218#.
Bureau of Transportation Statistics. (n.d.). Number of U.S. Aircraft, Vehicles, Vessels, and Other Conveyances. Retrieved September 9, 2022, from https://www.bts.gov/content/number-us-aircraft-vehicles-vessels-and-other-conveyances.
U.S. Environmental Protection Agency. (2022, June 30). Greenhouse Gas Emissions from a Typical Passenger Vehicle. https://www.epa.gov/greenvehicles/greenhouse-gas-emissions-typical-passenger-vehicle.
Hi Jackson,
I enjoyed reading through your post and learning a lot I did not know about Volkswagen. I think it is interesting that the company is doing so well that they may beat Tesla's sales by 2024, but like you mentioned I think is because of their promptness to jump on the making of electric cars. I think it is fascinating that some of the companies that have done the best in the business world are ones that are constantly looking to the future and what might be next on the horizon and then creating that product. Volkswagen providing electric cars as the demand continues to go up is setting the company up for a good trajectory in the coming years. Thanks for sharing!
I really enjoyed your post about Volkswagen. I do believe as gas prices go up, the Volkswagen market will go up. This is due to the fact that many Americans can not afford to buy a Telsa. They are able to maybe afford the Volkswagen and they will get a vehicle with the low gas mileage. Americans and people around the world. need cars to get around and they want a good quality car that has great gas mileage.