Danger Ahead: Volkswagen Plans For More Profits

Bertel Schmitt
by Bertel Schmitt
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danger ahead volkswagen plans for more profits

Volkswagen’s CEO warned its shareholders of a “very demanding year,” what with the European debt crisis depressing auto markets and growth in growth markets slowing. What is growing is risks, said Winterkorn at VW’s annual general meeting. Oddly enough, it is Volkswagen’s competitors who should be very worried.

U.S., South America and Russia helped VW increase group sales by 15 percent last year to a record 8.36 million cars. Volkswagen’s first quarter of 2012 broke another record with global sales increasing nearly 10 percent. In Europe, Volkswagen eked out a small gain in March, while competitors like PSA, Renault, GM and Fiat suffered double-digit losses.

Despite the warnings, Winterkorn did not lower expectations. Volkswagen wants to increase 2012 auto sales and revenue beyond 2011 results. Winterkorn restated the company’s goal to match last year’s record operating profit of 11.3 billion euros ($14.8 billion).

The total absorption of Porsche will have to wait some more. Volkswagen would have to pay about 1 billion euros in taxes if it would buy the remaining 50.1 percent of Porsche’s core car business before 2014. Buying Ducati for fun is one thing. Giving the money to the tax man is another.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Analoca Analoca on Apr 19, 2012

    I am not sure about double digit losses of VW competitors in March. I guess Bertel uses ACEA report which shows only passenger cars. The picture changes if all vehicles are counted, and there PSA, Renault are strong players...As for GM group, if we count the commercials, the loss vs March 2011 is a single digit (-6.1%)...still a loss, in contrast to clear VW gain.

  • Jandrews Jandrews on Apr 19, 2012

    I really don't understand Volkwagen's success. Everything about the way they design and service their vehicles is off putting to me. People say the same about Honda and Toyota, but at least they are reliably...er, reliable. People say the same about the Koreans, but at least they're cheap. People say the same about GM/Chevy, but at least they have some nifty features and solid light duty trucks I just don't get it...what's to like about VW from a mass market standpoint? Luxury pretense by being built in the same country as BMW, Mercedes, and Audi, but to a much lower quality standard?