Volkswagen Group wants to boost profit at its volume brands

Article by Anita Panait, on September 19, 2013

Although Europe's road to recovery remains uncertain, Volkswagen Group remains optimistic about its business and still plans to boost the profitability of its volume brands.  The German is expecting its loss-making Seat unit and its VW brand to contribute more towards the group's target to become the largest carmaker in the world three years from now.

To post higher profit margins, VW needs to expand beyond its home market and share more components to reduce costs. The VW brand, which account for a large part of the group's vehicle sales, is expected to post an operating profit margin that is over 6 percent of sales this year, according to a Sept. 9 presentation by VW Chief Financial Officer Hans Dieter Poetsch.

Seat is expecting to post a turnaround by posting profit margin of more than 5 percent, after logging EUR156 million in operating losses in 2012. Skoda is aiming to post a profit margin that is between 6 percent and 8 percent of sales, according to the presentation, which didn't set a timing for the achievement of the goals.

Daniel Schwarz, an analyst at Commerzbank AG, remarked to Bloomberg News that improved margins for Volkswagen's volume brands depend on "substantial cost reductions" through the rollout of parts-sharing technology, adding that the targets seem realistic. The VW group relies on its luxury units for more than half its profits, with profit from Audi and Porsche as well as presence in China helping it offset a six-year decline in the European car market.

Despite uncertainties in Europe, VW group still keeps its eyes on expansion, as evidenced by the launch of mainstream models like the Seat Leon ST and Skoda Rapid Spaceback and a van-like version of the VW Golf at the Frankfurt motor show this week. The carmaker has also unveiled the VW e-Golf and e-Up electric vehicles as well as a plug-in hybrid version of the Audi A3 hatchback.

Topics: vw, profit

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

Nearly a decade after Opel and sister brand Vauxhall introduced the Insignia large family car, these companies are now getting ready to unveil the second generation of this offering from...
by - December 7, 2016
After we caught a glimpse of the revamped Amarok, VW Australia once again wants to give its ute a sinister look inspired by the Mad Max movie franchise. The “Korama”...
by - December 7, 2016
Customers in the European market are known for leaning towards style and with this in mind, Nissan has revealed the special LEAF Black Edition. While the production run of this...
by - December 7, 2016
When Volkswagen unveiled the VW Atlas, it declared that this SUV is being developed for the United States and is set to arrive as a 2018 model. It also unveiled...
by - December 7, 2016
Did you miss the opportunity to get a brand new Dodge Viper? Well, here’s something you don’t want to miss. Dodge has announced a “final call” for orders for its...
by - December 6, 2016
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries