Record quarterly sales of luxury Porsches and Audis helped Volkswagen, Europe’s biggest carmaker, to stick to its full-year target for flat earnings today, easing some concerns about the costs of its new manufacturing platform.
Shares in the German group, which last month denied a report it was at risk of missing its financial targets because of higher costs, were over 4 per cent higher around mid-session.
However, some analysts expressed worries about the level of discounting on Volkswagen’s (VW) mass-market cars in a weak European market, and remained to be convinced its new manufacturing platform would deliver the promised benefits.
Slumping car demand in core European markets, where VW sells almost 40 per cent of its models, has caused sales in the debt-stricken region to drop for seven straight quarters.
VW has weathered the storm better than rivals and even raised its share of the European market while mass-market peers PSA Peugeot Citroen and Fiat are grappling with shrinking volumes.
Much of that has been due to luxury division Audi and sports car maker Porsche, which was fully absorbed by VW a year ago, with both brands also enjoying double-digit percentage sales growth in China and the United States.
Group operating profit rose almost a fifth to €2.78 billion in the third quarter. VW reaffirmed goals to match last year’s record operating profit of €11.5 billion euros and to push deliveries and sales to record levels this year.
Audi and Porsche contributed a combined two thirds to VW’s €8.55 billion nine-month profit and hold out the prospect of further growth, with Porsche adding a fifth model in 2014, the Macan compact SUV.
Nine-month deliveries at Stuttgart-based Porsche jumped 15 per cent to 120,000 while sales at Audi were up 8 per cent to €1.18 million, about 30,000 units behind luxury-market champion BMW that Audi has pledged to eclipse by 2020.
But with adverse foreign exchange moves and painful discounts in core European markets sparking a 4 per cent drop in third-quarter group sales to €47 billion, VW cautioned its full-year targets were “very ambitious.”
VW said switching production of small and medium-sized models at its four main passenger-car brands to its “MQB” modular platform “will have an increasingly positive effect” on the group’s cost structure, without elaborating.
Some analysts have warned the cost of MQB, designed to cut material outlays 20 per cent and shorten vehicle assembly times 30 per cent, will keep weighing on profits and that its savings may miss targets.
Reuters