This is the largest quarterly profit that Volkswagen AG has posted in 2 years and it's largely due to the increase in demand in China and the US for the Golf compact and Audi A5 coupe. In a statement, VW revealed that its second-quarter net income quadrupled to 1.25 billion euros ($1.63 billion) from 283 million euros a year earlier.
VW's profit exceeded the 721 million-euro median estimate of the nine analysts that Bloomberg News surveyed. It also reported a 22% increase in revenue to 33.2 billion euros. CEO Martin Winterkorn said that VW seeks to overtake Toyota Motor Corp. in terms of sales and profitability by 2018.
VW is aiming that this will be its second straight year of record deliveries. VW revealed plans to construct two new plants in China to double production capacity. Before the release, Daniel Schwarz, a Frankfurt-based analyst at Commerzbank AG, had said that he believes VW had a strong quarter because it has a sound model mix and a solid footing in the growth regions of the world.
He added that VW's volume brands are selling well while Audi is gaining because of the reviving luxury market. Last June 16, VW said that deliveries, which increased by 16% in the first half, may significantly surpass last year's 6.29 million vehicles.
The two new factories that VW will build in China are expected to bring its total in its biggest market to 11 as VW doubles production in China to 3 million vehicles within four years from 1.4 million in 2009. For the first half of the year in China, VW's deliveries rose by 46% to 950,278 vehicles.