Cars Per Employee And Productivity At Volkswagen Versus Toyota

Seen this morning in a Lean consultant’s blog:

“Two decades later, VW has topped Toyota as the world’s number one automaker, but Toyota generally is considered to be […] far more productive. In 2015, VW employs 600,000 people to produce 10 million cars while Toyota employs 340,000 to produce just under 9 million cars…”

Is it really that simple? VW produces 10 million/600,000 = 16.67 cars/employee/year, and Toyota 9 million/340,000 = 26.47 cars/employee/year. Ergo, Toyota is 60% more productive than VW — that is, if you accept cars/employee/year as an appropriate metric of productivity.  Unfortunately, it is a bad metric that can easily be gamed by outsourcing.

If a company employs more people than another to produce the same output, yes, it may be because it is less productive. But it may also be because it goes deeper into the manufacturing process. In car manufacturing, depth ranges from modular assembly, where, at Smart in 2014, 863 employees assembled a few major subsystem built by suppliers into 87,195 cars, or 101 cars/employee/year…

… to the old Ford River Rouge model, where, in the 1930s, 100,000 employees built finished cars from ore and sand, at about 10 cars/employee/year:

Ford River Rouge flow 19400001

The Rouge is relevant to this discussion as the inspiration for the Volkswagen “mothership” in Wolfsburg, down to the smokestacks:

Wolfsburg

According to a 2012 Autoblog article by John McElroy, Volkswagen is as vertically integrated today as GM was at its peak 50 years ago, and makes in-house many of the components that Toyota buys. In the car business, making your own components is supposed to be passé, but then, for a computer company to own retail stores was also supposed to be nutty when Jobs opened the first Apple store.

In any case, the number of cars/employee/year cannot be used to compare productivity between companies with different manufacturing depths. Perhaps Volkswagen is lagging behind Toyota in productivity, but this metric is no proof of it.

2 comments on “Cars Per Employee And Productivity At Volkswagen Versus Toyota

  1. Your article is great, but one thing is important: at least since the scandals broke out, we know all these companies have faced different scandals. But dont you think they outsource software in all the cases? What about comparing that?

    • I do not know whether the software in the cars’ embedded controllers is outsourced or not. For the emissions test rigging software at VW, I don’t believe it is, because, if it were, VW would have said so by now. More generally, the embedded control software is so central to the behavior of the car, to its safety and to its user experience that outsourcing it sounds like a bad idea.

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