Auto Investors, Prepare for a New Top Global Automaker

By Markets Fool.com

The idea that the automotive industry is fiercely competitive is not new. Automakers battle for customers through advertising campaigns and regularly refreshed vehicle designs, and by being the first to dominate sales in the next big emerging market. In an industry in which many consumers are loyal to a certain brand, gaining even a fraction of a percent of market share is critical.

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Three major automakers continually fight for sales to own the title of the world's biggest automaker. Toyota Motors defended its crown in 2014, but has essentially raised the white flag not even a month into 2015.

How it all wrapped up
Last year, Toyota sold 10.23 million vehicles across the globe. The Japanese automaker narrowly edged out German rivalVolkswagen , which sold 10.14 million vehicles (the first time the German automaker surpassed 10 million in global sales). Taking third place was the United States' largest automaker, General Motors , with 9.92 million sales globally.

Before Toyota claimed the sales titlein 2008, GM was king of the hill for nearly eight decades. ButGeneral Motors has been humbled in recent years, with major challenges including its bankruptcy and the recall of millions of GM vehicles following technical failures that were linked to a number of deaths.

However, Toyota projects that itssales will slide by 1% in 2015, to 10.15 million. The automaker's sales have notdeclined year over year since 2011 -- and that was due to the earthquake and tsunami that disrupted Japanese production and sales.

Toyota's forecast leaves the door wide open for Volkswagen to follow through on a claim it made years ago: CEO Martin Winterkorn said in 2013that the German automaker would become the world's largest automaker by 2018, and it appears that goal is well within reach -- years ahead of schedule.

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Volkswagen is on the cusp of taking the crown from Toyota because of its substantial lead in two key markets: Europe and China. Volkswagen's sales reached 3.95 million units in Europe's overall market last year, while Toyota failed to top 890,000 units. It's a similar story in China -- the world's largest automotive market and still one of the fastest-growing -- where Volkswagen sold 3.68 million units last year, far ahead of Toyota's 1.03 million.

If Volkswagen were to capture the global sales crown in 2015, it would be a substantial victory,as only GM and Toyota have ever held the top spot.

Source: General Motors.

What to expect?
While these automakers have certainly distanced themselves from other competitors when it comes to global sales, all three have the potential to claim the spot in 2015.

Despite GM looking up to Toyota and Volkswagen last year, the automaker has finally had the capital in recent years to begin long-overdue vehicle refreshes and redesigns.Consider that before the Silverado's and Sierra's recent redesign, the full-size trucks -- which are widely considered the automaker's most profitable and most important products -- had gone without a refresh for seven years. That's ancient in the automotive industry. As more of GM's new vehicles hit the market, look for sales to accelerate in 2015 and beyond.

Toyota's most important sales battlegroundwill be in its home nation. While Toyota expects sales to rise 2% outside of Japan, that would be partially undermined by a 9% expected tumble in domestic sales. Part of the reason for the anticipated decline is last year's increase inthe national consumption tax, which hindered demand for big purchases such as new vehicles.

Volkswagen, on the other hand, has plenty of upside right here in the United States. So far, the German automaker has chased down Toyota for the global sales crown without much success in the U.S. market, where it only ranks as the eighth-largest automaker, with 366,000 in sales last year -- a fraction of Toyota's 2.3 million in U.S. sales. In fact, Volkswagen's U.S.sales were down 10% for 2014 from the previous year, compared to the overall market's 6% gain, and its entire lineup was outsold by Ford's F-Series alone, twice over.

The German automaker isn't pinning its hopes in the U.S. on any certain vehicle, though it hopes to push multiple SUVs through its Volkswagen and Audi brand. Perhaps the biggest strategic moves here for Volkswagen will be its aim to lower prices while improving vehicle technology and reducing vehicle redesign cycles, which currently stretch years longer than those of its U.S. competitors -- a difficult list of tasks to accomplish in 2015 and 2016. However, if Volkswagen can gain a little traction in a surging U.S. market, there's no doubt in my mind that it will become the third automaker ever to claim the global sales crown in 2015.

The article Auto Investors, Prepare for a New Top Global Automaker originally appeared on Fool.com.

Daniel Miller owns shares of Apple, Ford, and General Motors. The Motley Fool recommends Apple, Ford, and General Motors. The Motley Fool owns shares of Apple and Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.