Volkswagen eyes U.S. as war disrupts production in Europe
Automaker plans to ramp up work in North America
Volkswagen is shifting its focus toward North America, as the fallout from Russia's attack on Ukraine caused more supply chain headaches for the company in Europe, executives said.
Since the outbreak of the war last month, several of the brands in the Volkswagen Group, including Porsche and Volkswagen, have suspended production at their plants because of disruptions to supplies, especially the wiring systems essential to the operation of vehicles.
Herbert Diess, the company's chief executive, said Tuesday that in response, Volkswagen was “shifting car production to regions such as China and the Americas” to help compensate for the disruptions in Europe and fill a backlog of orders.
Last year a shortage of semiconductors that plagued the industry contributed to a 6.3% drop in sales for Europe's largest carmaker. But the company made more than 20 billion euros ($22 billion) in profit before taxes in 2021, nearly doubling that of the previous year, thanks to a focus on building more profitable higher-end vehicles and lowering expenses.
This year, the company will put a priority on growing in North America, especially the United States, where the 2015 diesel cheating scandal eroded Volkswagen's reputation. More recently, though, the company's SUVs, including an electric model, have proved popular among American drivers, executives said.
“Our business is dependent on improvements in the North American market,” Ralf Brandstatter, the chief executive of the Volkswagen brand, said Wednesday.
Tesla, the most popular maker of electric cars in the United States, remains the strongest competition for Volkswagen, although both General Motors and Ford Motor have popular electric models. Last week, the company unveiled an electric version of the Volkswagen bus, the ID.Buzz, which it hopes will reignite American imaginations in the age of sustainability and #vanlife.
Volkswagen is counting on spinning off its highly successful Porsche division in the last three months of the year, which could give it more financial flexibility in the uncertain environment.