Anyone attending Volkswagen Group’s pre-auto-show bash on the evening of Sept. 14 could be forgiven for thinking that the one-time maker of the People’s Car has decided to become a manufacturer of exotic sports stallions for the very rich.
As bombastic music blasted from loudspeakers in a concert hall outside Frankfurt, VW execs paraded a series of impossibly luxurious speedsters and limousines.
They included the Bugatti Veyron 16.4 Grand Sport Sang Blue, which is made largely of carbon fiber and powered by a V16 engine. Or the Bentley Mulsanne, which requires 450 hours of hand construction and is “the opposite of mass production,” according to VW. The topper was the Lamborghini Reventón Roadster, which can go from 0 to 60 mph in 3.4 seconds and costs $1.6 million—not including sales tax.
As a reminder that VW is still, first and foremost, a mass-market carmaker, the company also unveiled a new Skoda station wagon. And VW rolled out an electric prototype of its Up, a mini car that is part of the company’s planned New Small Family of very fuel-efficient cars.
But the spotlight was on the super high end brands that VW has acquired since the 1990s. No question these models are impressive and great fun to ogle even if you’ll never be able to afford one. However, are they really worth the expenditure of so many resources?
Audi Chief Executive Rupert Stadler, who personally unveiled a new convertible version of the VW unit’s R8 sports car, gives the standard justification: such cars have a halo effect that helps raise the image of the whole brand. They also serve as a way to introduce new technology that might be too expensive for mass-market cars. “All innovative technology starts at the top end,” Stadler said in an interview. “You show the competence of your engineers.”
In addition, the exotic cars can be profitable. Lamborghini, which Stadler also oversees, has a profit margin of around 10%. (One would hope that VW is not losing money on a $1.6 million car.)
You could also read the parade of ostentatious vehicles as an expression of Volkswagen’s huge global ambitions. The company’s oft-stated goal is to surpass Toyota as the largest car company in the world. As VW CEO Martin Winterkorn boasted at the gala, the group covers every segment of the vehicle market, including Scania heavy trucks. And of course VW is acquiring German sports car maker Porsche as well.
Don’t expect Toyota to be drawn into some kind of smackdown for bragging rights as global leader, though. “We have never set a target to be No. 1,” Tadashi Arashima, CEO of Toyota Europe, told reporters at a more modest gathering a few hours before VW’s. “It happens to be that way. But that’s not our goal.”
“Volkswagen is certainly very formidable,” he continued. “We’ll see what happens. It really doesn’t matter.”
Source: businessweek
