This Could Crush General Motors Company (GM)’s China Chances: Volkswagen AG (ADR) (VLKAY)

Page 1 of 2

As the PR minions at General Motors Company (NYSE:GM) are fond of pointing out, GM currently holds the leading position (by market share) of the two largest automotive markets, China and the U.S.

General Motors (GM)

GM’s lead in the U.S. is probably safe, at least for now. But in China, GM is at risk of falling behind the company that is fast becoming its most dangerous global rival: Volkswagen AG (ADR) (PINK:VLKAY).

Volkswagen AG (ADR) (PINK:VLKAY) is making a big move in China
Despite gains by Toyota Motor Corporation (ADR) (NYSE:TM) and Ford Motor Company (NYSE:F) , General Motors Company (NYSE:GM)’s No. 1 position in the U.S. doesn’t seem likely to be under serious threat any time soon. While the General has lost some market share since its 2009 bankruptcy, it has a slew of new products due over the next couple of years. If they’re well-executed – and signs so far are mostly good – GM should be able to put some extra daylight between itself and its key rivals.

But the story is different in China. While Toyota is falling far behind the General, and Ford is still playing catch-up, GM arch-rival Volkswagen AG (ADR) (PINK:VLKAY) is investing big – and could blow right by GM before too long. Volkswagen AG (ADR) (PINK:VLKAY) CEO Martin Winterkorn said on Thursday that the company plans to build at least seven new factories in China over the next few years, as it aims to increase its China production 60% by 2018.

China, where Volkswagen AG (ADR) (PINK:VLKAY) has carved out a significant presence and sells nearly as many vehicles as General Motors Company (NYSE:GM), is a hugely important market for Germany’s largest automaker. As VW (like most of its regional rivals) continues to struggle with the deep recessions that have crushed new-car sales in Europe, where it is the market leader, it’s increasingly looking to China – as well as North America – to drive growth in coming years.

Big profits for the German giant
That growth has been happening. Volkswagen AG (ADR) (PINK:VLKAY) earned 11.5 billion euros, or about $14.9 billion, before interest and taxes in 2012, a number that dwarfs the $7.9 billion posted by GM for the year – and the numbers posted by most other global automakers. Simply put, VW’s innovative manufacturing model has led to strong margins – margins that could strengthen further as it continues to implement its approach around the world. Already, VW has posted three solid years of profit growth – and despite a worsening climate in Europe, it expects to post similar profit totals in 2013.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!