Volkswagen expects strong growth despite an economic slowdown

Article by Christian A., on August 25, 2011

Under the threat of an economic slowdown, German auto giant Volkswagen AG is anticipating its strong growth to continue, according to the head of the carmaker’s works council. Bernd Osterloh, representing labor on the company’s supervisory board, told the Hamburg business journalists' club late Wednesday that there were no signs that demand for cars is slackening this year.

Osterloh added that the company is “very robust” and has order books that will keep its plants working at high capacity for months. He further stated that the company is “doing well at the moment,” and disclosed that it could grow quicker than expected.

Moreover, Osterloh shared that even when the company is integrating truck maker MAN and sports vehicle manufacturer Porsche into its operations, the expected strong growth is still manageable, according to Autonews.

In July, Volkswagen has set a fresh sales record with deliveries up 17 percent, generally due to the growth in key markets Eastern Europe, North America and China. From the period between January and July, deliveries were up 12.5 percent compared with the same period last year.

Osterloh added that reduction in the workforce would not be a part of the agenda, even if the debt crisis begins an economic cooling in North America and Europe that cannot be offset by strong growth in Asia. He stated that they are able to respond to a decline in volumes in the double-digit percentages without adversely affecting employees.

Moreover, he said that VW’s plants in China, the company’s largest market, were operating beyond 100 percent of capacity.
The German company intends to provide permanent contracts to 2,200 out of 9,000 temporary workers this 2011, he disclosed. VW’s main factory in Wolfsburg employs almost half the company's total number of temporary workers.

In March this year, Volkswagen AG chief executive Martin Winterkorn remarked at the carmaker’s annual investors and press conference in Wolfsburg, Germany that to meet rising customers’ demands, more shifts are to be added at its factories. VW is relying on its growth in Russia, Brazil, China and India to narrow its gap with Toyota Motor Corp., which is currently the largest carmaker in the world.

For 2011, VW is predicting that its sales would surge 5 percent after posting a record 7.2 million deliveries of cars and SUVs in 2010. In 2010, VW saw its sales in China jump 37 percent to 1.92 million cars.

In 2010, VW’s net income grew seven-fold to EUR6.84 billion ($9.46 billion) from EUR960 million in 2009. Thanks to gains at the VW and Audi brands, group revenue leaped 21 percent to EUR127 billion.

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