Audi expects operating profit margin to drop 6% in 2015

Article by Christian Andrei, on October 21, 2013

Audi believes that heavy investments will launch new models and to grow production plants will almost halve its operating profit margin to 6% in 2015, according to a report from German magazine Manager Magazin. The new models like the Q6 and Q8 crossovers, as well as a compact van and an Audi version of the Volkswagen Up minicar, will enhance the brand after the middle of the decade.

The magazine’s sources (senior managers of the company) said that CEO Rupert Stadler accepts that the investments will momentarily reduce the profit margins for the next couple of years below his target corridor of 8-10%. The annual report stated that Audi posted a margin of 11% last year, down from 12.1% in 2011.

Stadler told Manager Magazin that he is aware that there are “immense” initial upfront investment requirements to fund the growth strategy. However, the company will reap more of the rewards beginning in 2016. Sources said that Stadler wants to surpass the 2 million mark in vehicle sales by 2017 or 2018 at the latest and achieve 2.4 million by 2020.

They also said that Stadler is aiming to reduce costs throughout the company and that savings are estimated to be in the high hundreds of millions of euros. In comparison, BMW hopes to sell 2.8 million units by 2020 while Daimler seeks to achieve sales of 2.6 million units. An Audi spokesman confirmed that the target range for the operating margin is still at 8-10%. [source: Reuters]

Topics: audi, profit

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