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The contrasting fortunes of two of Europe's largest car makers could not be more marked. As VW Group looks set to declare record profits of over $30bn, PSA Peugeot-Citroën SA is haemorrhaging money at the rate of around $200m a month!
Four months ago the French government came to the French maker's aid with loan guarantees and has declared it will do all it can to support the ailing car maker. Watch this space.
Meanwhile, VW Group seems to do no wrong. The only worry is its dependence on the Chinese market which now accounts for thirty per cent of its global sales. Surely, too many eggs in one basket there, despite China's impressive economic growth record in recent times. By contrast, it's only a mid-level player in the USA. Too dependent on the fortunes of one superpower and not big enough yet in the other should dictate a slight change in direction.
However, VW Group appears on the cusp of creating an automotive revolution with $70bn invested in a mega-platform strategy. MQB, an acronym for modular transverse matrix in German, is destined to be the platform of choice for all the group's small to medium-sized front-wheel drive cars while MLB will cover larger longitudinal-engined VW, Audi and Porsche models and MSB premium rear-wheel and four-wheel drive vehicles including Bentley, Lamborghini and Porsche.
The 'plug and play' platform system could see VW poised to become the world's biggest vehicle manufacturer within the next year or two. MQB will see two out of three of the group's models built around the platform. Parts normally ordered from component manufacturers to the order of five million plus will be more than seven times that figure with huge savings in economies of scale. The downside is that one component failure could lead to recall numbers multiplied by the same amount, not something worth thinking about it!
MQB began to be developed in 2007 and will be rolled out in earnest over the next four years, saving the group an estimated $19bn by 2019. Economies of scale, indeed!
Vehicle manufacturers are just starting to realise what they are up against and trying to claw back what will undoubtedly be a huge competitive advantage for the VW Group. PSA Peugeot-Citroën SA is lagging some ten years behind, indicating the widening chasm between those on top of their game in the automotive world and those who are fighting to survive.
And the man behind the idea? A gentleman called Ulrich Hackenberg who touted his idea for thirty odd years before VW identified the full potential of his idea - the global car, built like Lego.
If MQB, MLB and MSB repay VW Group's massive $70bn investment several fold, Ulrich Hackenberg's name is likely to be whispered in the same revered tones as Henry Ford, pioneer of car mass production. Now that would be some accolade.
Meanwhile, let's just hope that Peugeot is not reduced to producing bikes and pepper mills!
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