VW Knocks Toyota Off Catbird Seat; Becomes World’s Leading Automaker

Only three or four months ago, in the middle of some of the most intense coverage of the Dieselgate scandal, there were those who speculated that the emissions scandal would likely prevent Volkswagen from gaining the position as the number one carmaker in the world. It is a spot the German automaker has coveted for years.

Indeed, if you followed the conventional wisdom, it seemed to be a reasonable stance to take, for any number of reasons. For example, there was the self-inflicted nature of the emissions scandal itself. Not only was VW finally caught in the act – albeit by independent researchers looking for answers to a different question – but it admitted it. That admission has cost it billions, and the figure is only likely to grow. The costs, in turn, mean that VW would have to cut back on models and programs. And, all of that would mean that the number one spot was out of the question for some years.

Year Of Topsy-Turvy

Well, in this tumultuous year if the conventional political wisdom can be tossed on its ear so can assumptions about how market forces can work. So, at the nine-month point, the latest month for which numbers are available, VW Group has pulled ahead of Toyota in global sales. This puts Toyo’s “four-year reign as the world’s largest carmaker at risk,” said a Bloomberg in story Thursday.

Through September, Toyota’s worldwide deliveries were up by 0.4 percent or 7.53 million. Volkswagen sales climbed 2.4 percent to 7.61 vehicles.

For the rest of the year, Volkswagen, barring a substantial turnaround by Toyota, will stay in first place, mostly thanks to market positioning. Toyota, whose market is strongly influenced by its linkage to the U.S., has seen its fortunes fall away due to a sales slowdown, while VW, which has a leading position in China, is benefitting from a tax cut there that has flipped the switch on sales.

VW outsells Toyota by 3-to-1 in China. It has boosted its deliveries by 11 percent to 2.58 million units through September. Growth is expected to reach 7 percent, hitting a record 26.3 million vehicles this year, according to estimates by the China Association of Automobile Manufacturers.

China May Extend Tax Cut

Volkswagen may also benefit from an extension of the tax cut. The tax cut has been set to expire at year’s end, Qu Guochun, an industry ministry official, told Bloomberg.

In the U.S., Toyota’s sales have dipped to 1.82 million units through September. Toyota, which experienced a record 2015, has seen its sales decline to 0.5 percent in 2016, says the auto research firm, Autodata Corp. One of the key reasons for Toyota’s swooning fortunes is gasoline price. Because gas prices have remained down and stable for a long time, demand for one of Toyota’s former market leaders, the Prius hybrid, has tailed away. Even a redesign has not had much effect.