VW Profits Up 15%; China's Automakers Also Doing Well
VeeDub in Germany has just issued their numbers for the past nine months of 2008. Viewed through the prevailing “the world is coming to an end” perspective, VW’s financial results are financial pornography, performing better than the male lead in a Russ Meyer movie. We’re talking a 15 percent gain, a money shot of more than $6b pretax. From January to September 2008, VW moved 4.8m units and grabbed a 10.1 percent share of the world market, according to the usually reliable Automobilwoche [sub]. Despite of what’s happening elsewhere in the piston business, Volkswagen’s CFO Hans-Dieter Pötsch stands by his bullish guidance for 2008: the predicted numbers will come true. Elsewhere, China’s automakers have also released profit reports for the third quarter.
From July to September, the 17 companies combined automotive revenues totaled 47.385b yuan ($6.93b), down a mere 2.9 percentage points from last year. Their net profits drooped to 747m yuan, down – oops – 62.4 percent year-on-year, laments the government’s news agency Xinhua via Gasgoo. Never mind. Profits aren’t a Chinese company’s main objective; they often leave that to their presence in Hong Kong, where taxes are low. The notable news: they ain’t losing money.
That said, China’s bad boys are from Detroit’s central casting: China’s former car giant Shanghai GM has completed only 54 percent of its 2008 sales goal. In a wise move, the joint venture reduced this year’s sales target of its Chevrolet brand by 25 percent. Likewise, big cheese Chinese automaker FAW reduced 2008 targets for its Magotan (think VW Passat B6 platform) to 70k units from the 90k target set in January. Which didn’t faze Wolfsburg one bit.
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As a former owner of a 2000 Jetta 2.0 and a Golf 1.8t I swore off VW forever. Both cars had a rap sheet as long as my arm. They were wonderful to drive, but the reliability was awful. Those cars were the low-point of the MKIV platform. Friends that had 2003 model year cars had very few problems. I bought a 2007 G35 that I loved - but it developed an engine problem that the dealer and Nissan NA did not want to fix. (Engine vibration/timing problems at low speeds is normal?) After driving a bunch of small, fun to drive, fuel efficient cars, I found myself back at the VW dealer. I bought a 2008 GTI w/DSG transmission. Yes, I know - VW has a lot to prove in terms of longevity, but this car is a peach. It's put together solidly, it's a blast to drive, and it gets pretty good mileage. The only other car that came close was a MINI. I couldn't justify $6000 more for a car I liked less. VW does have some pretty compelling vehicles right now - the Passat CC looks hot, and the MK VI series cars also look good. Hopefully, VW learned their lesson with the MK IV cars. -ted
@Zerofoo: You're right. The turn of the millennium was the dark ages for VW as far as quality was concerned. I was an outside consultant for their taskforce to improve customer satisfaction, and it looked like lifetime employment! These things take a (long) time to rectify. With a lot of sweat, quality can be fixed in a few years, serious improvement takes generations. Customer satisfaction takes even longer. As your post attests, customers don't suffer from Alzheimers when they had been wronged. Quality cars make for proftable companies. Warranty costs down (and way back when, they were HUGE,) word-of-mouth up, bottom line bulging. I wouldn't worry about their longevity. Matter of fact, in Wolfsburg they are already worried about the darn things lasting too long.