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I'll be honest -- I'm a Ford (NYSE: F  ) guy, and I have been since my first day investing. However, to be close minded and biased would go against my investing beliefs, so I call it like I see it. I see an investment that I think is going to provide the best auto industry gains for investors, and it isn't Ford or General Motors (NYSE: GM  ) . That isn't to say Ford and GM aren't valuable investments; I believe they are, as well. However, I think Volkswagen (NASDAQOTH: VLKAY  ) is poised to execute its global strategies, and become one of the best automaker investments over the next 5-10 years. Volkswagen's management took it one step further, previously predicting to be the global sales leader by 2018. That's a shocking statement, considering it's long been a title for Toyota or GM to hold. I'm going to list reasons why Volkswagen has a chance to pull it off, and if it doesn't, why its diversification makes it the safest automaker to invest in.

Future market share
In KPMG's very thorough survey polling executives from all parts of the automotive industry, the favorites to gain global market share were ranked. Out of the ten auto manufacturers expected to gain market share going forward, only two were from western countries. Volkswagen was No. 1, with 81% of executives believing its global share will continue to increase, showing confidence in the company's ability to produce quality vehicles, profitably. 

Ford was the highest ranked U.S. manufacturer, with 44% believing it would increase global share. Its rank slipped from its eighth last year to fourteenth currently, just one spot ahead of Detroit rival GM. The rankings reflect that executives believe Detroit has more to prove globally before its market share increases.

It's clear that Volkswagen has positioned itself and its products well to command such respect from executives across the entire industry. Let's dig a little deeper into where Volkswagen operates successfully.

Profits spread out
Unlike Ford and GM, who largely depends on the U.S. market for most of their profits, Volkswagen is diversified globally. Volkswagen is Europe's biggest automaker by sales, and increased its market share from 23.6%, to 24.4% last month. While Europe is a complete disaster, it's a testament to how diverse Volkswagen's profits are to remain a stable company. Unfortunately, Ford, GM, and Chrysler couldn't say the same when the U.S. market tanked in a similar fashion. Volkswagen has also been a very strong, consistent performer in China. GM comes in the top spot in unit sales in China, at 2.83 million, barely edging out VW, at 2.81. As China's market continues to grow and thrive, Volkswagen is positioned to take advantage of that situation as well as, or better than, any manufacturer. 

Proven quality
Volkswagen's key to reach its No. 1 leader in sales globally will be to take share in the U.S. market. It has its work cut out, though, as Detroit  owns the truck segment almost entirely, while making legitimate progress in light vehicles. Toyota and Honda still command high levels of loyalty in fuel efficient and other small vehicles. It does have one thing up its sleeve -- its proven record of quality. That will give it a chance to break into the top five manufacturers in U.S. vehicle sales, but it will take time. Take a look at the table below, of top individual recalls, to better understand why domestic automakers have had such a stigma of poor quality. 

  Top 10 Recalls  
Rank Automaker Vehicles Affected
1 Ford 21 million
2 Ford 15 million
3 Ford 7.9 million
4 GM 6.7 million
5 GM 5.8 million
6 Toyota 5.7 million
7 Ford 4.1 million
8 GM 3.7 million
9 Honda 3.7 million
10 Volkswagen 3.7 million

Alongside its vehicle quality, it has over 12 brands that represent almost every market segment in the auto industry. It manufactures everything from entry-level to ultra-luxury, such as Lamborghini, making its dependence on a single segment limited. With a diverse product line, and ultra-luxury that is less volatile with economic downturns, it's a much safer bet than Ford and GM, which are largely dependent on the truck segment for profits.As you can see, Ford and GM combine to have 70% of the worst recalls in history. Ouch. Those two are doing all they can to reverse that image, and are making progress slowly, but surely. However, without the poor quality stigma, Volkswagen may be able to grow its share in the U.S. market.

Bottom line
More executives across the auto industry believe Volkswagen over any other manufacturer will increase its global share in the future. It has a well-rounded global strategy that limits its dependence on any one economy, and has potential gains left in the U.S. and Chinese markets. It has a wide range of vehicles in all the necessary segments, and has a proven record to produce quality vehicles with few defects or recalls. All those reasons are important for it to reach its No. 1 global sales leader, but those reasons also show how diverse and stable this company is. It has no dependency on any one segment or economy. It also has a significant amount of cash that gives it financial flexibility for the unknown.

This is a manufacturer that is a safe bet to return solid gains. It also has a real chance to reach its No. 1 goal, giving it a chance to return the industry's best gains. 

It's true that decades of mismanagement at General Motors led to a painful bankruptcy in 2009, but it emerged a leaner, stronger company. GM's turnaround, however, is still a work in progress. Investors around the world are wondering if GM has what it takes to reclaim its former glory. John Rosevear has put together a brand-new premium research report telling you what you need to know about GM and its turnaround. If you own or are thinking about owning GM, then you don't want to miss this report. Click here now to get started.

Read/Post Comments (3) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 21, 2013, at 10:49 PM, MARKETSURFER wrote:

    In the latest JD Power and Associates reliability survey Lexus brand was the best with

    General Motors second. Looking on down the line is so happens that Volkswagen was rated the worst for reliability. Hmmm...... Doesn't sound very


  • Report this Comment On February 25, 2013, at 9:30 AM, queenmilk wrote:

    The Schaeffler Company is a German family owned auto and other parts manufacturer. They have a very innovative research team whose empahsis on quality as well as innovation has helped the Fords and other car companies proceed at such a fast rate toward safer cars.

  • Report this Comment On February 27, 2013, at 4:26 PM, huntmac0 wrote:

    I just drove a VW SUV and was very impressed with what I perceived as a quality vehicle.

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