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Volkswagen bucks the trend in crowd of struggling carmakers
[FRANKFURT] Volkswagen (VW) stuck to its annual outlook after second-quarter operating profit beat expectations, proving resilient in the face of a global autos slowdown that's seen forecasts of rivals like Daimler crumble.
A strong model lineup helped offset a drop in vehicle sales and negative currency effects, the world's biggest carmaker said Thursday. VW has boosted its offering of lucrative sport utility vehicles, a segment where the company lagged behind rivals for years.
"Our model mix is improving and we've been successful with our pricing," chief financial officer Frank Witter told Bloomberg TV in an interview. The second half of the year will be "potentially difficult" in a "weaker market environment," he said.
Carmakers have struggled in the past months with falling demand and record spending for electric and self-driving cars that are squeezing returns, leading companies like Daimler, Tesla and Ford to cut annual guidance or fall short of expectations. In the troubled times, Volkswagen and Peugeot-maker PSA Group are bucking the trend, both relying on higher-priced SUVs.
While Volkswagen's second-quarter profit excluding special items declined 8.1 per cent to 5.13 billion euros (S$7.8 billion), it still beat analyst expectations of 4.9 billion euros. The company reiterated it expects an operating return on sales at the lower end of a range of 6.5 per cent and 7.5 per cent after an 8 per cent margin in the first half of the year.
The 12-brand maker of Audi and VW cars is also getting a boost from sharing components across nameplates. Dubbed MQB technology, the group is able to save costs across its vast lineup of small and mid-sized vehicles, Credit Suisse said in a note this week.
VW last month listed its trucks business Traton, a significant milestone as part of an asset review to focus on the main car business. Investors expect an update on the next steps to streamline VW's conglomerate structure, which might include selling industrial machinery units Renk AG and MAN Energy Solutions.