No 'blue sky," but a global footprint, strong sales in China and an efficient line mean positive results.

In the face of a 21% overall decline in global vehicle demand, Volkswagen Aktiengesellschaft still managed to make an operating profit and increase its liquidity during the first quarter of fiscal year 2009.

The VW Group’s operating profit amounted to €312 million ($406 million) down from €1.3 billion ($1.7 billion) in the year earlier quarter. A loss was only prevented by the one-time sales of its Brazilian commercial vehicles business that contributed positively around €600 million to the results. Automotive net liquidity rose to €10.7 billion from €8.0 billion compared with the end of 2008.

“The Volkswagen Group, too, is not immune to the dramatic deterioration in the global business environment,” said the Chairman of the Board of Management, Doctor Martin Winterkorn, on Wednesday. The Group’s unit sales declined by approximately 16% in the first three months; production has been cut by around 25% and inventories reduced significantly as a result, he claimed.

“The strengths of our multi-brand Group prove themselves especially in difficult times: we have increased our global market share thanks to our young and environmentally friendly model range, and are in a sound financial position,” stressed Winterkorn. “Our goal for fiscal year 2009 remains to outperform the market as a whole and to gain additional market share.”

With its nine brands and what he calls a young model range, Winterkorn thinks the Volkswagen Group is well positioned. In 2009, the individual brands will again introduce numerous new and low-fuel consumption models that will further extend the Group’s product portfolio and cover new market segments. “For this reason, although we assume that the Volkswagen Group will be unable to escape the downward trend, we believe that it will perform better than the market as a whole and will be able to gain additional market share during the crisis” Winterkorn said. 

“The high volatility of market developments does not permit any reliable forecasts to be made for the rest of fiscal year 2009,” Winterkorn warned.  The Group’s sales revenue in 2009 will be lower than in the previous year because of the decline in volume. Rising refinancing costs and a worsening of the country mix of models will also hurt earnings. Volkswagen thinks it will counter this trend through “disciplined cost and investment management and the continuous optimization of its processes.”

As TheDetroitBureau.com previously reported, VW group sales make it the world’s largest automaker, surpassing Toyota in Q1 2009. However, the lead is small and VW is facing problems with its Seat brand. The company is using its other brands to prop up Seat. In the latest move, a SEAT factory in Martorell, Spain, will begin making Audi Q3  models in 2011 with an annual production capacity of up to 80,000 units. The total investment will amount to around €300 million.

Whether VW can hang onto the lead, and how the sales battle develops will be closely watched by industry observers, who love a race.