automotive

Volkswagen Gets Boost From China To Post Record Revenue

Volkswagen has China to thank. The German automaker may be struggling to keep things moving in the U.S., but it is going gangbusters globally, largely because of the automaker's success in the fastest-growing market. The Wolfsburg, Germany-based global automaker posted record revenue of €202.5 billion, versus €197.0 billion the previous fiscal year; and operating profit of €12.7 billion, versus €11.7 billion in fiscal 2013. 

“We can look back on the past fiscal year with satisfaction: despite the difficult economic environment, we achieved our goals for 2014. At the same time, our forward-looking efficiency program ‘Future Tracks’ has laid the groundwork that will enable us to continue our successful trajectory with all our strength,” said the automaker’s chairman, Martin Winterkorn, in a presentation.

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Chief Financial Officer Hans Dieter Pötsch said outside of China, the view is less clear. “Given the subdued growth prospects in regions outside China, there is no guarantee that 2015 will be a successful year – either for the industry or for the Volkswagen Group.” He said political uncertainty, currency fluctuations and tough environments in BRIC markets (Russia and Brazil, in particular) present “major challenges for the Volkswagen Group this year as well.”

He added the company predicts it will “moderately” increase deliveries to customers year-on-year this year, with sales revenue for the group to increase 4%, year over year. “The difficult market environment, fierce competition, interest rate and exchange rate volatility, and fluctuations in raw materials prices all pose challenges. We anticipate a positive effect from the efficiency programs implemented by all brands.”

It is because of China, where VW is opening a new factory this year, and where it shares the top spot with General Motors, that the automaker may pass Toyota to be the number-one global automaker in sheer volume. The company, which sold over 3.6 million cars and trucks in China last year, has said it plans to boost capacity in China to over 4 million vehicles by 2018.

In the U.S. the automaker has been tight on new vehicles. Last month its share was 10th, behind Kia and just above Mercedes-Benz. None of its vehicles were near the ten top sellers. The one it did bring, the redesigned Golf, won plaudits as car of the year at the Detroit auto show. But the car, which accounted for something over 4,000 units delivered in January, is by no means the automaker's volume maker in this country. The Jetta, which is, accounted for 8,320 units delivered.

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