Volkswagen delivered a huge third quarter, while rival Daimler had its problems.
Confirming it is on track to become the global sales leader Volkswagen revealed it had also hit one out of the park, tripling its net profit for the third quarter of 2011.
Things didn’t go so well for VW’s German rival during the July – September quarter, however, Daimler AG announcing a 15% earnings decline – even though senior officials insisted the company is still on track to deliver better numbers for all of 2011.
Volkswagen’s big increase accompanied a sharp jump in worldwide sales, which reached 6.2 million vehicles during the first nine months of this year. With VW expected to top sales of 8 million for the full year, industry analysts have predicted the carmaker will outsell rivals General Motors and Toyota – which had led the industry for the last few years but has been hurt by production cuts resulting from the Japanese earthquake of March 11.
For his part, VW Chief Executive Martin Winterkorn admitted his goal of world automotive domination, though not necessarily this year, telling investors, “We are on the right path to becoming the world’s leading automaker by 2018 — in both economic and ecological terms.”
Daimler CEO Zetsche is still optimistic about the company's full year results.
VW operating profit jumped 46% for the latest quarter, to 2.9 billion Euros, or $4 billion, while net income nearly tripled to 7 billion Euros or $10 billion. Net income for the first nine months of this year, at 13.6 billion Euros, or $19 billion, was more than the company earned for all of 2010.
VW saw sales revenues surge 25.3%, to 38.5 billion Euros, the maker scoring from double-digit growth at most of its brands, notably including Audi, which is now vying with traditional luxury segment leaders Mercedes-Benz and BMW for dominance. It also reported gains in its shares of Porsche, the Stuttgart-based sports car manufacturer it eventually intends to merge with.
Although those plans have been put on hold a revaluation of its puts and calls added 6.8 billion Euros to VW’s third-quarter results.
During an investor call, VW officials warned that the global market is becoming “more complicated,” notably due to the financial problems in Europe. But analysts also point to increased raw materials costs that hurt earnings at Ford, which announced a modest decline on Wednesday.
That also factored into the decline suffered by Daimler AG, parent of Mercedes, which saw its earnings for the third quarter dip to 1.36 billion Euros or $1.9 billion.
Sales were hammered by problems in Europe, where the Mercedes and Smart brands suffered a 2% decline – and especially in the home German market.
In a corporate statement, Daimler warned that the “outlook for the world economy is distinctly less favorable than just a few months ago.” Nonetheless, Daimler CEO Dieter Zetsche insisted, “We continue to expect group earnings before interest and taxes to very significantly exceed the level of 2010.”
Whether Daimler and Volkswagen can meet their near-term prospects also will depend upon their performance in China. VW, in particular, is one of the leaders in that booming Asian market. But after years of double-digit growth, the Chinese market is showing signs of slowing down, some economists warning of the possibility its economic bubble could burst.