Volkswagen buys stake of Suzuki

Volkswagen already on its way to becoming the new largest automotive maker on the planet has announced big news just to further cement that intention.

This week it was announced that VW was to purchase a 20 percent stake in Suzuki Motor Corp. for a slick $2.5 billion, which will doubtlessly support them to gain a foothold in emerging Asian markets like China and India. If the vehicles produced by Suzuki are counted, third-place Volkswagen would be in a neck-and-neck race with first place Toyota Motor Corp. General Motors Corp. is currently in second place.

Volkswagen has been busy, the take over of Porsche earlier this year which added to its already-formidable lineup of brands, including Audi, Bentley and Czech manufacturer Skoda.

Volkswagen has struggled in the U.S. by misconceptions that its cars and vans were of poor quality. Sales are improving thanks to its well-regarded diesel vehicles, which account for about one-quarter of its sales. TV commercials featuring the the talking Beetle with a German accent as thick as sauerbraten seem to be working.

The company realizes the challenges it faces.

“As you know, an entrepreneur isn’t just someone who creates a new business,” Stefan Jacoby, the head of Volkswagen Group of America, said in a recent speech at Duke University. “It can also be someone who redefines an existing business. That is what my colleagues and I are trying to do at the Volkswagen Group of America. We intend to reclaim Volkswagen’s place as a leading brand in the U.S. market. “

During the late 1960s, Volkswagen made some of the most popular vehicles in the U.S. Beetles, used vans, and Microbuses were symbols of the counterculture, like peace signs and love beads. The brand began to fade in the late 1970s and in 1987 the company announced that it would close its plant in New Stanton, Pennsylvania.

Volkswagen hopes to sell 800,000 units in the U.S. by 2018, which is a pretty tall order considering the automaker sold 163,196 vehicles this year as of November. It also aims to triple its sales in China by that time. But given the state of the car industry, time is on its side. Volkswagen may make additional acquisitions as car companies bite the dust because of the recession.