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VW profits soar: 9m models sold

2013-03-22 09:16

VW SALES SKYROCKET: When Martin Winterkom, VW chief executive officer, set growth targets in 2007, he probably did not expect the automaker’s fantastic growth in 2012.

Volkswagen, which six years ago set out to become the world's biggest automaker, reported a record operating income the equivalent of R139-billion for 2012 - surpassing General Motors’ R73.5-billion and Toyota's R103-billion.

The Detroit News reported that when Martin Winterkorn, VW chief executive officer, set the growth targets in 2007, the automaker didn't look much like a World-beater. It had just gone through a disruptive round of job cuts, its namesake brand was barely breaking even, and Toyota earned about R93-billion more than VW.


Winterkorn vowed to raise pretax profit margins to 8% from just 1.7% in 2006. He said VW would boost deliveries to more than 10 million vehicles from 6.2 million in 2007 - in effect adding the sales of a carmaker almost as big as Hyundai Motor Co.

Max Warburton, an analyst with Sanford C. Bernstein in Singapore said: "It's been a master class in execution. Of course there are always elements of luck with corporate plans like this, but mostly they've just gone out and done what they said they wanted to do with good products and increasingly competitive prices."

The 2013 race will be tighter and may come down to currency fluctuations. With Toyota bouncing back from product recalls and natural disasters, the Japanese manufacturer is set to report about R166-billion in operating profit in 2013, according to estimates compiled by Bloomberg.

According to Detroit News VW is closing in on becoming the biggest automaker by sales. Deliveries surged 11% to 9.07-million passenger vehicles in 2012, boosted by growth in China and expansion in the U.S. Toyota had 9.75-million deliveries, while GM sold 9.29-million. VW also sold more than 200 000 heavy trucks and buses at its MAN and Scania brand.

Winterkom said: "I think we'll reach our volume target earlier than planned.”

VW will have to work hard to hold on to its achievements. Its profit lead will be challenged in 2013 as the effects of the sovereign-debt crisis spread from southern Europe to Germany, said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany.

Bratzel said: "Volkswagen is extremely focused on growth. And that makes it very dependent on the global economy expanding and other regions balancing out the weakness in Europe," where sales are forecast to fall for the sixth straight year in 2013.

Despite the record income from 2012, it seems VW still has some issues to sort through. Wheels24 reported that the automaker will recall 384 181 vehicles in China over gearbox defects.

Read more on:    toyota  |  profit  |  sales  |  volkswagen  |  gm

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