Audi might fail to meet its target of increasing profits in 2013 due to European market

Article by Christian Andrei, on December 25, 2012

Audi is becoming more pessimistic about the likelihood of increasing earnings in 2013 because of the declining European markets. This makes it more difficult for its parent, Volkswagen Group, to meet its target of increasing profits in 2013. VW has eight passenger-car brands, including Porsche and Czech arm Skoda. But Audi is the biggest profit generator of VW. CEO Rupert Stadler told Reuters that Audi estimates that it will take 2-3 years for its sales to go back to growth in the poverty-hit Europe, where half of its cars are sold.

Stadler said when interviewed that in Europe, the wind has become “much harsher.” He added that customers in Europe are “unnerved” by the impact of the debt crisis. During the fourth quarter, Stadler has turned more negative about the business outlook in Europe.

He said during the Paris auto show in September that it’s possible that Audi's core markets may stagnate for the next 1-2 years. In November, Audi sales in Germany and Europe dropped by 4.3% and 1.9% respectively, after having posted increases of 5.1% and 4.2%, respectively, in October. Stadler was also asked if Audi’s target of raising auto sales in 2013 will lead to a bigger 2013 operating profit, the CEO said that he won’t bet on that for now.

The nine-month profit of Audi rose by 6% to 4.2 billion euros, nearly half the 8.8 billion of parent VW. If VW's flagship brand fails to boost its earnings next year, this will act as an obstacle to its efforts to increase its 2013 group profit to be higher than the record last year of 11.3 billion euros. For 2012, VW is preparing itself for flat earnings due to spending on a new technology for producing small and mid-sized vehicles.

Topics: audi, profit, europe

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