Vw believes the auto industry crisis will last longer than expected

Article by Christian Andrei, on August 25, 2010

With Volkswagen AG's belief that the auto industry crisis will last longer than expected, it has lowered its previous assumptions for global car market sales by 67 million vehicles for the period through 2018. In a joint letter sent by VW's executive board to the automaker's senior managers, VW's former head of group sales Detlef Wittig said that its loss for the global market during this period is "equivalent to an entire calendar year."

Wittig asserted that long-term structural changes to the auto market come as a result of the financial crisis.

This will then lead to sustained lower group deliveries to customers versus VW's previous plan, and consequently a lower financial result.

In the letter, VW CEO Martin Winterkorn said that he remains intent on achieving his target of overtaking Toyota Motor Corp. as the world's largest carmaker by 2018.

In the same letter, VW finance chief Hans Dieter Poetsch warned that "the most critical year of the crisis is ahead of us." Poetsch thinks that sales in the core European market will be weak in 2010 due to the termination of scrapping bonuses, which gave cash incentives to buyers to swap old cars for new models.

He said that there will continue to be substantial overcapacity and high price pressures in the market." Automobilwoche, a German-language sister publication to Automotive News Europe, had obtained a copy of this letter.

Topics: vw

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