The Teflon Is Coming Off: Volkswagen And Daimler Not So Sure Anymore
So far, German car companies Volkswagen and Daimler had been unaffected by the severe downdraft in Europe and brought in record profits. Now, the Teflon seems to be flaking off.
At Volkswagen, the press release has the whistling-in-the-dark headline “Volkswagen Group remains solidly on track,” but reading further, one finds signs of worry. According to the statement, Volkswagen CEO Martin Winterkorn thinks that “conditions had become noticeably harder and tougher.” That little sentence sent the VW share 3 percent lower, Reuters reports.
According to the press release, Winterkorn said that “we want to become the world’s best automaker by 2018.” Do we notice a slight change of tack here? Before, it was always “world’s largest automaker by 2018.” Or, even more audacious: World’s best automaker, in units, in profitability, innovation, customer satisfaction. Climbing down?
Last week, reminds us Reuters, Daimler warned that operating profit at Mercedes will fall short of planned targets, citing the slump in Europe and a tougher China business.
Currently, Volkswagen is in the defensive, scaling down sales plans in Europe. There also are rumors about a massive scale-back of plans in China
Deflation is a curse on both the exporter and the importer, but somewhat worse for the exporter.
hreardon, Agreed, VW has a lot riding on new launches. I believe they will be largely successful. As for other German car company being discussed, with Daimler's products being mostly "mid to high end", if the economy gets any uglier in China and Europe, they will be in for a very rough ride..
Why do I suspect this has more to do with the downturn in China and less to do with the slump in Europe?
The only silver lining for the German auto industry, is the recent Sino-Nippon quarrel over some rocks lost on the south China Sea. As reported on TTAC and other venues, the Chinese are now weary about investing on Japanese goods, and most of the new buyers will migrate towards German vehicles. This could soften their landing. The Japanese though, are primed for a new economic Tsunami.