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Business

VW looking to surpass Toyota for No. 1 spot

FRANKFURT/DETROIT -- Volkswagen is hoping to unseat Toyota Motor as the world's No. 1 carmaker as soon as this year, an attempt whose success could depend on the company's performance in the U.S. market.

     The German auto giant sold 10.14 million vehicles in 2014, achieving a 4.2% year-on-year sales increase and topping the 10 million mark for the first time. All of Volkswagen's passenger-car brands managed to lift sales from the prior year.

     Market conditions were tough, but all brands contributed to the group's sales goal, Martin Winterkorn, VW's chief executive officer, said Sunday. He was in the U.S. to attend the North American International Auto Show that kicked off this week in Detroit.

Extraordinary winning streak

Even among the global top three, Volkswagen's sales track record since the start of the new century stands out. Sales at Toyota and General Motors skidded in 2009, hit by the global financial crisis. Volkswagen, however, has a streak of sales gains stretching back to 2002.

     Its solid sales growth has been driven by the expansion of the Chinese market. VW's sales in China climbed 12% in 2014, accounting for 36% of its sales worldwide.

     One of the first foreign carmakers to set up shop in China, Volkswagen now operates eight plants there through two local joint ventures. The company plans to pour 22 billion euros ($25.9 billion) into its Chinese operations over the 2015-2019 period. By 2018, its output capacity there is expected to reach 4 million units a year.

     Thanks to dramatic sales growth in China, VW has roughly doubled its overall revenue over the last 10 years. But as the Chinese auto market starts slowing down, the company must shore up its flagging U.S. operations and bolster profitability.

Weaker US sales

The German automaker's performance in the U.S. has been lackluster. Its group sales there dipped 2% last year. Volkswagen passenger cars were effectively the sole loser in the market, with sales dropping 10%. To turn the U.S. business around, the company aims to invest $7 billion by 2018.

     In the meantime, the carmaker hopes to whet U.S. motorists' appetite with its new plug-in hybrid SUV. The Cross Coupe GTE features a V-6 engine and two motors to deliver solid driving performance despite being an eco-friendly vehicle.

     Volkswagen's highly fuel-efficient midsize sedan, the Passat, has failed to excite U.S. drivers. With the new plug-in hybrid SUV, the company added power to appeal to American consumers. Although the new model won't start contributing to sales until 2016 at the earliest, VW has high expectations for the vehicle's success.

     During the unveiling of the SUV Monday at the motor show, Winterkorn described the Cross Coupe GTE as the most suitable car for the U.S. market.

     As for the other challenge of lifting profitability, the strategy of using a single vehicle platform for multiple models "has not produced the expected results so far," according to a stock analyst.

     Volkswagen last year announced plans to cut costs by a total of 5 billion euros.

     "Requests for price cuts from Volkswagen have intensified since around last summer," said an official at a Japanese autoparts maker in Germany.

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