The (Auto) World Tilts East

The opening sentence of this news release is nothing short of startling: “The Volkswagen Group delivered more vehicles than originally expected during the first half of 2010.” One of the things that tends to affect people in companies is what could be considered irrational optimism (although there probably isn’t anything rational about optimism): Even if people have lowered expectations in terms of sales, often those expectations still exceed what would be a reasonable expectation.

The opening sentence of this news release is nothing short of startling: “The Volkswagen Group delivered more vehicles than originally expected during the first half of 2010.”

One of the things that tends to affect people in companies is what could be considered irrational optimism (although there probably isn’t anything rational about optimism): Even if people have lowered expectations in terms of sales, often those expectations still exceed what would be a reasonable expectation.

Overall, the Group—which includes the volume brands VW, Audi, Škoda, and SEAT—moved 3.58 million vehicles, which is an increase of some 16% compared with the first half of 2009.

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Another thing that may come as a surprise is the location of the Group’s largest market: No, it is not Germany. In fact, its sales were actually down 15.9% in the home market.

The biggest VW Group market is China, where its sales for the first half of 2010 were up 45.7%. It moved 950,030 units in China. As a point of comparison, it delivered 531,300 in Germany and while its business in the U.S. grew 29.2% compared with 2009, it sold just 175,300 vehicles in the U.S.

If there is any question of whether the automotive world is decidedly tilting in the direction of China, VW’s unexpected results should provide a clear answer.