By on July 26, 2012

It looks more and more like a divided Europe. While carmakers Opel, Ford, PSA, Fiat etc. are wailing with pain, German carmakers report expectation-beating profits.

Germany’s Daimler reports an EBIT of €2.24 billion ($2.75 billion) and a net profit of  €1.51 billion ($1.86 billion) for the second quarter of 2012. The profits would have been higher without the startup costs for the new A-Class. For the half year, that’s  €4.37 billion ($5.36 billion) in EBIT and €2.931 billion ($3.59 billion) after tax.

From Wolfsburg, Volkswagen reports a pre-tax profit of €10.1 billion ($12.4 billion) , and a net profit of €8.8 billion ($10.8 billion) for the first half year.

Why are they doing well when others don’t? “Our strong position in international markets will enable us to outperform the market as a whole, despite the challenging environment,” VW  CEO Martin Winterkorn said.

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10 Comments on “While Europe Weeps, Winterkorn And Zetsche Laugh...”


  • avatar
    philadlj

    Are these European profits, or total global profits?

    If the former, it means that whatever reason (better products, better marketing, better deals), when Europeans deign to buy cars, they’re choosing Daimler and VW over others, and so they’re not struggling as much.

    If the latter, it means Daimler and VW have done a better job than their struggling rivals at mitigating the pain from Europe’s slog through greater success in other markets.

    Considering Winterkorn’s quote, I’d guess the latter.

  • avatar
    NN

    wow, that’s a lot of cheddar. The German govt is busy bailing out the rest of Europe, but the returns they’re getting can partially be seen here, as VW’s cost structure is helped by the uncompetitiveness of the southern European economies holding down the value of the Euro.

    If the Euro collapses, which may eventually be the only solution to the economic chasm between north and south in Europe, then theoretically the German marques will be left with a currency that rapidly appreciates in value to reflect the true strength of the German economy, and these profits won’t be so robust.

  • avatar
    dcars

    As a country They have become very aggressive towards other car makers. VW opened a plant in the US with employee benfits and pay that are not even close to their German counter parts. In addition The German government is investigating the alliance of PSA/GM on competition grounds.
    http://www.just-auto.com/news/cartel-office-extends-psagm-alliance-probe-to-september_id124819.aspx
    Talk about kicking a country when it’s down.

    • 0 avatar
      th009

      VW will pay German wages in Germany, but competitive US wages in the US, competitive Mexican wages in Mexico, competitive Brazilian wages in Brazil and so on.

      The same is true of every global company, whether it be GM, Ford, Sony, Apple or anyone else: no one has a standard global wage. If VW, Ford or Nissan paid home-market wages at their Mexican factories, those factories would become uncompetitive — you might as well build the cars at home.

    • 0 avatar

      Every merger and acquisition in Germany is subject to government approval. This is a routine matter.

      It only becomes interesting when it goes beyond routine ….

  • avatar
    schmitt trigger

    +2 on that
    The reason companies are investing so much in a foreign factories, is because the costs of operating those factories are lower.
    And….Wages and benefits are a significant portion of that cost.

  • avatar

    Renault seems to be doing fine, although European, although primarily in small cars. Better long-term strategy, I’d presume.

  • avatar
    mkirk

    I am not shocked at all…arent most profits now made on financing and in the service department for car makers? The Germans should be making more profit than the Government of Saudi Arabia.

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