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