The improving conditions of the European turnaround as well as the expenses reduction plans have allowed Germany’s Volkswagen Ag, the world’s second largest automaker and the biggest in Europe, to post a strong financial result for the year’s first quarter.
The forecast-beating earnings have also brought a much needed relief after the carmaker’s leadership was entrenched in a bitter feud over the past couple of weeks, when long-running chairman Ferdinand Piech expressed his dissent for chief executive officer Martin Winterkorn and secretly ploted his demise but ultimately had to hand over his resignation. Just for days later after his unexpected weekend departure, the carmaker reproted a jump in operating profit of 17 percent for the first three months of the year and also the first quarterly positive result for its Spanish subsidiary Seat after seven years of losses. The analysts are also noting an improvement in the group’s drive to achieve a higher level of profitability through the introduction of a modular structure for current and upcoming vehicles, which actually backfired initially.
The automaker also showed stronger signs the improving European situation is here to last, as the group still relies for around 40 percent of total sales on its home continent. The VW brand also made certain progress in its drive to shed operating costs worth five billion euros annually trhough 2017. Additionally, the Porsche brand – which only covers a fraction of total sales but still brings in close to 25 percent of earnings, also showcased a positive forecast for the entire year, thansk to increased demand and currency tailwinds.