VW AG has recently decided to lower its global delivery goal for the year and also said it was gearing up to withstand the coming stagnant sales in China, the world’s and the carmaker’s largest auto market.
China’s situation, with the sales affected by the economic woes – the surge is predicted this year to be the slowest in more than two decades – and the stock market in deep turmoil, has impacted all global automakers and also has a huge effect on the ones that were used to the double-digit profit and sales growth. The German automaker managed to become the interim worldwide leader, overtaking in the process Japan’s Toyota during the first six months of the year, but the outcome for the rest of 2015 is clouded by the country’s woes – long seen by VW as a very stable resource that could fund its global surge ambitions. Now chief finance officer Hans Dieter Poetsch announced the profits sourced from the automaker’s two Chinese joint ventures could even post a negative trend this year – the market has shifted to more affordable rides because demand is now paced by rural, less wealthy regions of the country.
“China is going to be a massive problem” for the automaker, commented Bernstein analyst Max Warburton. “Present trends are worrying, with a substantial fall in profit per unit in China.” The German carmaker modified its full year forecast, expecting sales to be flat on the record levels seen in 2014 – though previously it had envisioned a “moderate” rise.