In rather a statement of the obvious, Volkswagen said today that market conditions in Europe had become noticeably tougher and that they likely would not get better in the near future. However, Europe’s largest auto maker believes it is better positioned than its rivals to handle the economic uncertainty.
It is true that VW’s large presence in such dynamic markets as China and Russia does give it some advantage over European mass-market rivals such as PSA Peugeot-Citroen and Renault. VW has a healthier balance sheet as well.
Volkswagen said worldwide deliveries rose 10% to 5.91 million cars and SUVs in the first eight months of this year. That contrasts with a 6.6% industrywide contraction in Europe, with sales in 2012 forecast to reach a 17-year low.
Volkswagen previously said it expects its operating profit to remain flat year-on-year in 2012 despite higher vehicles sales. This is due to large investments for expanding production capacity and for its new modular toolkit technology. The new modular system will enable VW to share certain components and technology between a wide variety of different vehicles across the group. It is part of Volkswagen’s strategy to boost sales volume, safeguard profit margins and take on market leaders such as General Motors Co. (NYSE: GM) and Toyota Motor Corp. (NYSE: TM).
CEO Martin Winterkorn has said that Volkswagen wants to become the “world’s best auto maker” by 2018. But that is likely a goal shared by all the major auto makers.