VW plans to introduce as many as 40 new models across its various brands this year. The Golf R is shown here.
The European economy may be teetering towards disaster but it was full steam ahead for Volkswagen AG, the German automaker handily exceeding analysts’ already optimistic expectations with a first-quarter profit of $4.2 billion.
The 87% jump reflected VW’s steady sales gains around the world, especially in the United States, along with China, Russia and other emerging markets.
“With the first quarter we have had a clearly good start to the year,” said Volkswagen Chief Executive Martin Winterkorn in a prepared statement.
In Euros, VW’s net profit rose to 3.17 billion, with pretax profits up 93%, to 4.3 billion Euros. Revenues jumped to 47.3 billion Euros, a 26% gain driven by an 11% increase in worldwide vehicle deliveries. The maker sold 2.21 million vehicles during the quarter, which could put it in a position – if it continues that trend – to take on U.S. rival General Motors for the global automotive sales lead this year.
GM regained that title last year after Toyota Motor Co. was toppled off its throne by the March 2011 Japanese earthquake and tsunami, which seriously curtailed its production. VW landed in the number two spot.
But the German maker has set a goal of increasing sales to 10 million units annually by the latter half of the decade, which it believes would position itself as the global leader.
VW is betting on several markets to help it meet that target, notably including the U.S., where it wants to triple 2011 sales – to 800,000 units annually, including its VW and Audi brands. State-side sales surged 34% during the first quarter driven, in large part, by new models such as the 2012 Passat, built at a new VW assembly plant in Chattanooga, Tennessee.
But China is also a critical source of sales and revenues. The world’s largest automotive market is also now VW’s single largest national market, and its two joint ventures there contributed 848 million Euros of profits for the January to March quarter, up from 557 million during the same period in 2011.
Demand has also been growing in other emerging markets, such as Russia, but the maker is facing the same challenges in Western Europe as its competitors. Demand, industry analysts warn, could continue slipping until the ongoing debt crisis there is resolved.
In his statement, CEO Winterkorn acknowledged the situation is “very demanding,” but added that, “Nevertheless, I’m still convinced that the Volkswagen Group can approach the coming months with confidence.”
The maker is counting on a flood of 40 new products scheduled this year for brands ranging from Skoda to Lamborghini to help keep driving demand. But it also hopes to improve its margins by various cost-cutting methods, including the expanded use of modular designs for its various product lines.
That could help bump up margins from their 6.8% level during the first quarter.
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