VW Managed to Offset Q1 Loss in Europe Thanks to Porsche image

VW said that the addition of Porsche helped the bran offset the fall in operating profit during the first quarter, caused by the recession in Europe.

Audi remained VW’s largest earnings contributor bringing 1.31 billion euro ($1.71 billion) during the first quarter, which is 56% of the group’s total compared with 45% in 2012. The profit for VW brand reached 590 million euro, dropping 9 percentage points to 25% of the total. Porsche, which has been merged with VW in August, accounted for 24% of the automaker’s earnings.

VW’s growth in Europe is held back by the fact that the auto market in the region heads towards the sixth consecutive year of contraction, also affecting the automaker’s plan to surpass world auto industry leaders, Toyota and GM by 2018. VW’s strategy to offset the decline in Europe relies on the introduction of 60 updated and new models by the end of this year, among which the upgraded Golf hatchback, Skoda Octavia small car and the Audi A3.

“We expect that the Volkswagen group will outperform the market as a whole in a challenging environment,” VW said.

CEO Martin Winterkorn also plans to expand VW’s presence in the more profitable premium segment and Audi has had more than four years to take the first place as the world’s luxury-car leader from BMW. The fact that VW expanded in the premium segment and in emerging markets such as China, has helped the automaker better deal with the European drop compared with its rivals PSA Peugeot Citroen and Renault.

Source: Blomberg