Toyota successfully defended its status as the world's largest automaker in the first half of 2014. However, Volkswagen has gotten very close and is widely expected to overtake Toyota either by the end of the year or in 2015 at latest.

As we all know, size alone does not matter. Both manufacturers are quick to stress that they primarily strive for profitability rather than leading unit sales. However, size and profitability are directly interlinked. The increasing use of common parts and modular setup allows larger automakers to derive profit gains from sheer size.

Adopting a modular production strategy is arguably essential if automakers wish to stay competitive in the industry. A Roland Berger study shows that companies with a modular strategy have revenue growth that is one-third larger than competitors that have not adopted such a strategy, particularly in emerging growth markets.