Volkswagen Becomes the Smallest of Germany's Big 3 Car Companies

2015-10-02 13:23

Only a few weeks ago, Volkswagen Group AG, was the bluest of blue chip companies. Fast forward to today, and the company behind the People's Car is a different beast. Of the most recent Forbes List of the World's 2000 Leading Companies, VW was second by many metrics behind Toyota. The crisis at the Wolfsburg, Germany-based car maker has been nothing short of damaging for one of the world's most popular brands, and other brands like Audi and Skoda, which are part of the bigger VW Group. I gathered some information to illustrate the extent of the VW's emissions crisis, whose biggest victim has been the company's much lauded CEO, Martin Winterkon. Alongside him are millions of VW, Audi and Skoda car owners who have for years been misled by the company. The other equally important losers are the company's shareholders who have seen almost $40-billion wiped out of their ownership in the past two weeks. To put that into perspective, that's about 10% of the South African economy vanishing in a matter of days!

The effects of the crisis will be felt for years by all the aggrieved parties, as experienced when Toyota had to recall as much as 16 million cars from 2009 following their defective accelerators. For VW specifically, the company's current woes will bode badly for their ambitions to be the biggest car maker in the world by the end of the decade, but of course a lot can change in the next five years. In the meantime, below is an illustration of how the sizes of the other big car makers from Germany and Toyota, measured in US Dollar market capitalisation on 02 October 2015 have changed since Volkswagen's fall out on 18 September 2015. Toyota Motor Company alone is bigger than all of Germany's Big 3 combined! The troubles VW may expand to other car makers, but as things stand, VW is now a long way from reaching top position. This is quite curious because at one time in 2008, Volkswagen Group AG was the largest company in the world, or to think that VW passenger cars like the Polo Vivo have been constantly outsold every other car in South Africa since the beginning of the year.

Ultimately, the fact that the VW brand was not even favoured by most Americans, the country with the most affected number of cars, will further tarnish the brand equity therein – worldwide also.

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