Faced with geopolitical risk, Volkswagen wants to strengthen in the United States

The German car giant Volkswagen confirmed on Wednesday its ambition to more than double its market share in the United States, a region neglected in recent years but which is gaining importance in a “increasingly polarized world“.

After a first quarter marked by a 100% jump in net profit to 6.7 billion euros despite a drop in the number of cars sold, the group sees North America and “especially the United States” as “priorityin its quest for global growth, according to a statement Wednesday. In this market, where the scandal of rigged diesel engines broke out in 2015 “diesel gate“, the group generated in 2021 the first profit for years. “Even in an increasingly polarized world, Volkswagen is determined to expand its global presence“, explained the boss Herbert Diess.

A desire to conquer 10% of the battery market by 2030

At the end of March, the group announced an investment of 7.1 billion dollars in its American production, it plans to open a battery cell factory there and wants to conquer 10% of the market by 2030 against 4.2% in 2021. The flagship brand VW is to increase from 2.5% to 5% in this market by pushing SUVs even further, more in demand in the United States than sedans or compacts, and thanks to ID.Buzz, the electric version of the mythical VW combi particularly popular across the Atlantic. The press recently also evoked the project of a new factory near the existing site in Chattanooga at a time when the diversification of sources of income is gaining in importance. “Geopolitical developments” have “exposed our vulnerabilities“, had recognized the CEO in mid-April. In question in particular: the dependence on the Chinese market, the most important of Volkswagen, while the war in Ukraine has also highlighted that of Germany vis-à-vis Russian gas.

Already, “the worldwide presence of Volkswagen has helped us to cushion a major part of the negative effects that we are currently facing“, whether they are linked to the war in Ukraine or to the Covid-19 pandemic, notes Herbert Diess. For example, the manufacturer was able to send semiconductors to the United States or China that it could not use in Europe, where production was suffering from the impact of the war in Ukraine. The offensive launched by Russia is in fact limiting the supply of automotive cables produced in Ukraine, which is leading to production interruptions in Europe. The Russian invasion also led to sharp increases in commodity prices. Despite the uncertainties linked to the conflict and the evolution of the pandemic in China, Volkswagen confirmed its annual objective on Wednesday, betting in particular on an improvement in the supply of chips in the second half.

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