Volkswagen confident despite braking car market

Volkswagen confident despite braking car market
In this Sept. 30, 2015, file photo, a 2013 Volkswagen Passat with a diesel engine is evaluated at the California Air Resources Board emissions test lab in El Monte, Calif. (AP)
Updated 30 October 2019

Volkswagen confident despite braking car market

Volkswagen confident despite braking car market
  • A global growth slowdown triggered by trade wars and Brexit uncertainty has hit the car industry particularly hard
  • Looking to individual brands, the flagship VW division saw higher profits as more of the cars it sold belonged to high-margin SUV lines

FRANKFURT: German car giant Volkswagen said Wednesday it was confident of hitting financial targets despite a lower unit sales outlook, warning “vehicle markets will contract faster than previously anticipated in many regions.”

The Wolfsburg-based group now expects deliveries to match 2018’s level, rather than the slight growth forecast until now, after unit sales fell 1.5 percent in the year to September at around eight million.

A global growth slowdown triggered by trade wars and Brexit uncertainty has hit the car industry particularly hard.

But VW is confident of increasing revenue “as much as” five percent year-on-year, and keeping its closely-watched operating profit margin between 6.5 and 7.5 percent.

In January-September, net profits at the group grew 19 percent, to 11.2 billion euros ($12.5 billion).

Sales income added 6.9 percent, reaching 186.6 billion euros, making for an operating profit up 24.5 percent, at 13.5 billion.

“The Volkswagen Group achieves a good performance amid a challenging market environment,” chief financial officer Frank Witter said in a statement.

Part of the profit surge can be attributed to lower charges related to the company’s “dieselgate” emissions cheating scandal dating back to 2015.

In January-September 2018, the diesel burden reached 2.4 billion euros, falling to 1.3 billion over the same period this year.

A major element in 2019’s total was a 535-million-euro fine Stuttgart prosecutors issued in May to subsidiary Porsche over so-called “defeat devices,” designed to cheat regulatory emissions tests.

Looking to individual brands, the flagship VW division saw higher profits as more of the cars it sold belonged to high-margin SUV lines.

High-end subsidiary Audi’s sales continued to suffer from new emissions testing procedures that have disrupted production, while revenues were also weighed down by higher investments.