Nov 22 - The VW board meets to approve a new budget that aims to make the German car maker the world's biggest. But is big bad or beautiful for today's motor manufacturers? Hayley Platt reports.
It's already Europe's biggest car maker and behind the region's best-selling vehicle - the Golf But German auto maker Volkswagen isn't satisfied with that - it wants to become the world's number one. Its board of directors are currently in Hamburg to approve a new budget which could see it achieve its goal by 2018. But although sales are doing well, profits are under pressure. It's party due to an investment in a new modular platform capable of building 4 million cars. Many of the world's top car makers share platforms to achieve economies of scale. But that can have its drawbacks. As VW recently found out when it suffered its biggest recall affecting 2.6 million cars worldwide. Olaf Storbeck is from Reuters Breakingviews. SOUNDBITE: Olaf Storbeck, Reuters Breakingviews, saying (English): "The standardisation of course comes at a risk, so if you have a problem with a part and this part is being used in several million cars then of course you maximise your trouble. Other companies have similar issues. So there's a risk but I think this risk is kind of manageable and all car manufacturers are dealing with it." A strong euro is also a problem. As is the competition. Ford is pouring $150 million dollars into its Buffalo plant in New York where it makes parts for several of its models. In an exclusive interview with Reuters, Ford's European CEO Stephen Odell says size is important but not crucial. SOUNDBITE: Stephen Odell, CEO, Ford Europe, saying (English): "I think you have to be a certain size to be able to compete. In the industry globally is about 18 million this year growing to 100 million some time in the next decade so it's absolutely a growth industry and it's very competitive as you've seen from margins and therefore the ability to have scale, useable scale is important." Europe's car industry has been hit hard by the euro zone's debt crisis. Six year's of losses has left many auto makers in a spin. But higher sales in October suggests the market is finally turning the corner. SOUNDBITE: Stephen Odell, CEO, Ford Europe, saying (English): "It's running a long way off where we were of course from the height, 18 million down to about 13.5 million. There are some signs, UK probably a bit more of a standout than others that there are signs of improvement but our view is it would be gradual." Volkswagen have faired better than many of its rivals largely thanks to strong sales of its premium brands like Audi and Porsche. In October the group reported record sales, boosting third-quarter profits by a fifth. It says it's on track to meet its targets - taking it one step closer to its goal.