Volkswagen makes a big push to be No. 1

Volkswagen Chairman and CEO Martin Winterkorn walked into the German automaker’s annual meeting on Thursday and flashed a big smile.

Who can blame him?

Eight years after taking over the company, with the goal of making it the world’s automaker No. 1, Winterkorn has just about accomplished that feat.

In fact, while VW is careful not to declare it will pass Toyota to become the world’s biggest automaker by volume sales, most in the industry expect it to happen in 2015.

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“I don’t know whether we’ll surpass Toyota this year but [we’ll] try to also achieve our other targets,” Winterkorn told CNBC at the Berlin meeting.

Those other targets, most notably growing profit margins, are part of the new push by Winterkorn and his team. Last year, Volkswagen posted an operating profit of 6.3 percent as its two largest brands, VW and Audi, saw margins drop slightly due to hefty investments for expansion.

“We want to be the volume number one but also we want to have 8 percent in operating profit,” Winterkorn said.

China driving growth as the US struggles

China, where Volkswagen has long been the largest automaker, remains its biggest driver of growth. Already boasting annual production of 3.7 million vehicles there, the company plans to expand that figure by about a third, to 5 million vehicles by 2019.

“China remains a big growth market also for us,” Winterkorn said.

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Still, Winterkorn stressed that being the leader in China isn’t enough. As part of his goal to make the company better balanced geographically, he’s eyeing the U.S.—where Volkswagen has struggled even as the market enjoys a boom in sales—as a potential lever.

Getty Images Volkswagen AG Chairman Martin Winterkorn speaks at the company's annual press conference to announce financial results, March 13, 2014, in Berlin.

Getty Images
Volkswagen AG Chairman Martin Winterkorn speaks at the company’s annual press conference to announce financial results, March 13, 2014, in Berlin.

Despite U.S. auto sales reaching 16.52 million last year, their highest since before the recession, Volkswagen’s sales in North America declined 2.4 percent.

The problem: VW has been slow to roll out SUVs in a market where big vehicles are red hot. It’s working to fix that shortfall with a yet to be named new SUV targeted for American car buyers, coming to showrooms next year. Shortly after that, the company says there will be more SUVs and crossovers coming out its Tennessee plant.

“We procrastinated in the U.S., it’s true,” Winterkorn said. “And we are changing that.”

Apple car threat

The next five years will see a dramatic shift in the types of vehicles sold, what powers them and how connected they are, Winterkorn said. At the center of that change are Apple and Google.

VW is working with both tech firms, amid speculation that they may eventually build vehicles themselves. But Winterkorn played down how much the two companies could disrupt traditional automakers.

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“I believe that for city traffic with small cars and low speeds [Apple and Google] are well placed,” he said.

“But combustion engines not so much,” he said.

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